ASSESSING THE IMPACT OF HUMAN CAPITAL AND POLITICAL PARTICIPATION ON FOREIGN DIRECT INVESTMENT IN SELECTED SOUTH ASIAN COUNTRIES

Abstract

This study analyzes the importance of human capital towards FDI inflows to selected Asian Countries, Bangladesh, China, India and Pakistan. Panel data for the period 1990–2024 has been used in this study to check the role of Human capital on FDI inflows. This study has used a proxy for Human Capital as Secondary School Enrollment and used different model for FDI instrument like panel OLS, fixed effect model and random effect model. All of the results show that human capital has a significant and positive impact on FDI. Other supporting variables includes trade openness, GDP growth, polity 2 variable for political participation as an indicator of FDI, inflation, communication infrastructure and natural resources all shown as indicators of FDI as control variables. This study suggest that enhance the flow of FDI to Asia like under developed countries the Human Capital needs to be improve more rapidly in form of secondary education and many other ways (not included in this study). The researcher can contribute to this study by taking other aspects of Human Capital as well which are left unattended in this study.