Measuring the Impact of Population Health and Education on Foreign Direct Investment: Panel Evidence from 46 Countries

Abstract

This study exploresthe impact of population health and education on inflows of foreign direct investment (FDI) by conducting a panel data analysis of 46 developing countries over the period 1996–2011. We found that that gross inflows of FDI are strongly influenced by population health in developing countries. The result suggests that improving life expectancy by one year increases gross FDI inflows by about 7%. alternative specifications of this panel model also support this view.Also, the estimated model does not bring about any significant relation between education level and FDI in developing countries. The findings are consistent with the hypothesis that population health is an important ohuman capital instrument for developing countries and improved population health is likely to attract higher FDI inflow.