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Title: FDI, the Brain Drain and Trade: Channels and Evidence

Author(s): Jaime de Melo and Artjoms Ivlevs

Publication Date: October 2008

Keyword(s): Brain Drain, FDI, Migration and Trade

Programme Area(s): International Trade and Regional Economics

Abstract: This paper explores the links between the patterns of migration (high vs. low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects of the skill-composition of exports on FDI. The model suggests that if exports are low-skill intensive, emigration of high- skill labour leads to positive FDI, suggesting that migration and FDI are complements. Cross-sectional analysis using FDI and emigration data for 103 migration-sending countries over the period 1990-2000 finds some support for this conjecture.

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Bibliographic Reference

de Melo, J and Ivlevs, A. 2008. 'FDI, the Brain Drain and Trade: Channels and Evidence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7002