Assessing the Dynamic Interaction of Foreign Direct Investment, Human Capital and Income Convergence
Subject Areas :Khadijeh Ashrafi 1 , Hatef Hazeri 2 * , Siamak Shokouhifard 3
1 - Master of Economics, Mohaghegh Ardabili University
2 - Associate Professor, Faculty of Social Sciences, Mohaghegh Ardabili University, Ardabil, Iran
3 - Department of Economics, Payame Noor University (PNU), P.O BOX, 19395- 4697 Tehran, Iran
Keywords: Keywords: Panel-VAR Approach, Foreign Direct Investment, Human Capital, Developing Countries, Income Convergence.,
Abstract :
Khadijeh Ashrafi Hatef Hazeri Siamak Shokouhifard Abstract Capital accumulation is one of the prerequisites of the economic growth process that can be done through external and internal resources. Foreign direct investment, especially in developing countries can lead to technology transfer, technology improvement and human capital and thus increase National income and economic growth rate. To investigate this issue, this study studies the convergence of income by emphasizing the role of foreign direct investment and human capital in selected developing countries during the period 2004-2023 with the Panel-VAR approach. The results show that the change in foreign direct capital and human capital has a significant effect on GDP. However, the results of the weak process of income convergence in developing countries show that they are affected by changes in foreign direct investment and human capital. In general, due to the fact that foreign direct investment flows are increasing day by day, the results of this study show the impact of GDP on foreign direct investment changes, and on the other hand, human capital with labor mobility is a very important factor in achieving income and growth convergence. Therefore, it is worthwhile for policymakers and economic institutions to provide the ground for foreign investment to enter the country by reducing tariffs and barriers to entry and granting facilities to foreign investors. Also, considering that human capital is one of the effective factors in GDP and has more positive effects on GDP with more time intervals, and also as a factor in attracting foreign investment, planners and policymakers by reducing interruptions by increasing the quality of education and support. From scientific and research centers and using new technologies to pave the way for economic growth in the country.