"Empowering Communities: A Systematic Review of FDI Initiatives for Skill Development and Local Capacity Building"

Yeboah, Samuel (2023): "Empowering Communities: A Systematic Review of FDI Initiatives for Skill Development and Local Capacity Building".

Abstract

Foreign Direct Investment (FDI) has emerged as a significant driver of skill development and local capacity building within host countries. This systematic review explores the mechanisms through which FDI initiatives contribute to skill enhancement, knowledge transfer, and the overall development of local talent and economies. By examining various channels of knowledge exchange, including training programs, joint ventures, technology licensing, mentorship, research collaborations, and more, this review provides insights into the dynamic synergy created when global expertise meets local talent. The review highlights the multifaceted benefits of FDI for communities, including improved competitiveness, innovation, and sustainable growth. Through a systematic and comprehensive analysis of existing literature, this review sheds light on the pivotal role FDI plays in empowering communities and fostering continuous development. Policymakers, scholars, and practitioners seeking to leverage FDI for local capacity building will find this review to be a valuable resource.

• Item Type: MPRA Paper
• Language: English
• Keywords: Skill Development; Local Capacity Building; Knowledge Transfer; Training Programs; Joint Ventures; Technology Licensing; Mentorship; Research Collaborations; Empowerment; Sustainable Development; Innovation; Global Expertise; Local Talent; Community Development
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O35 - Social Innovation; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy

References

Abebe, G., McMillan, M., & Serafinelli, M. (2021). Foreign direct investment and knowledge diffusion in poor locations. The Quarterly Journal of Economics, 136(1), 1-49.

Alcácer, J., & Oxley, J. E. (2014). Learning by supplying. Strategic Management Journal, 35(2), 204-223.

Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2010). Does foreign direct investment promote growth? Exploring the role of financial markets on linkages. Journal of Development Economics, 91(2), 242-256.

Alfaro, L., Chanda, A., Kalemli-Ozcan, S., & Sayek, S. (2010). Does foreign direct investment promote growth? Exploring the role of financial markets on linkages. Journal of Development Economics, 91(2), 242-256.

Ando, S., & Wang, M. (2020). Do FDI firms employ more workers than domestic firms for each dollar of assets? IMF Working Paper No. 20/56. International Monetary Fund. https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf

ASQ. (n.d.). Quality standards. https://asq.org/quality-resources/quality-standards

Balsvik, R., Jensen, S., & Salvanes, K. G. (2015). Made in China, sold in Norway: Local labor market effects of an import shock. Journal of Public Economics, 127, 137-144.

Blalock, G., & Gertler, P. J. (2008). Welfare gains from foreign direct investment through technology transfer to local suppliers. Journal of International Economics, 74(2), 402-421.

Blomström, M., & Kokko, A. (1998). Multinational corporations and spillovers. Journal of Economic Surveys, 12(3), 247-277.

Blomström, M., & Kokko, A. (2003). The economics of foreign direct investment incentives. NBER Working Paper No. 9489. National Bureau of Economic Research.

Boogaard, K. (2022). 4 keys to successful cross-cultural collaboration. Work Life by Atlassian. https://www.atlassian.com/blog/teamwork/cross-cultural-collaboration

Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115-135.

Brookings. (2015). Understanding FDI spillover mechanisms. Retrieved from https://www.brookings.edu/articles/understanding-fdi-spillover-mechanisms/

Constable, A. (2021). Why the characteristics of the entrepreneurial mindset matter. Forbes. Retrieved from [https://www.forbes.com/sites/forbescoachescouncil/2021/04/22/why-the-characteristics-of-the-entrepreneurial-mindset-matter/]

Crespo, N., & Fontoura, M. P. (2007). Determinant factors of FDI spillovers: What do we really know? World Development, 35(3), 410-425.

Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy (2nd ed.). Edward Elgar Publishing.

Elboiashi, H. (2011). Foreign direct investment and economic growth: A theoretical framework. Journal of Governance and Regulation, 3(2), 6-14. https://www.bing.com/search?q=FDI+and+knowledge+transfer&toWww=1&redig=9FD8F65286BF486B977CD26545683970

Farole, T., & Winkler, D. (2014). Making foreign direct investment work for Sub-Saharan Africa: Local spillovers and competitiveness in global value chains. World Bank Publications.

Forbes Coaches Council. (2021). HR experts explain 16 benefits of training and development. https://www.forbes.com/sites/forbeshumanresourcescouncil/2021/12/17/hr-experts-explain-16-benefits-of-training-and-development/

Forbes Human Resources Council. (2021). HR experts explain 16 benefits of training and development. https://www.forbes.com/sites/forbeshumanresourcescouncil/2021/12/17/hr-experts-explain-16-benefits-of-training-and-development/

Fu, X. (2012). Foreign direct investment and managerial knowledge spillovers through the diffusion of management practices. Journal of Management Studies, 49(5), 970-999.

Ghemawat, P. (2017). The new globalization: Going beyond the rhetoric. Boston Consulting Group.

Görg, H., & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171-197.

Ha, T. S., Chu, V. T., Nguyen, M. T. T., Nguyen, D. H. T., & Nguyen, A. N. T. (2021). The impact of Greenfield investment on domestic entrepreneurship. Journal of Innovation and Entrepreneurship, 10(24). https://innovation-entrepreneurship.springeropen.com/articles/10.1186/s13731-021-00164-6

Haas, M. R., & Cummings, J. N. (2015). Barriers to knowledge seeking within MNC teams: Which differences matter most? Journal of International Business Studies, 46(1), 36-62.

Hale, G., & Xu, M. (2016). FDI effects on the labor market of host countries. Federal Reserve Bank of San Francisco Working Paper No. 2016-25. https://www.frbsf.org/economic-research/wp-content/uploads/sites/4/wp2016-25.pdf

Hayes, A. (2020). Operational Efficiency Definition, With Examples. Investopedia. https://www.investopedia.com/terms/o/operationalefficiency.asp

HBR. (2015). When culture doesn’t translate. https://hbr.org/2015/10/when-culture-doesnt-translate

IMD. (2020). The localization of global supply chains amid the pandemic. https://www.imd.org/research-knowledge/supply-chain/articles/the-localization-of-global-supply-chains-amid-the-pandemic/

ITIF. (2021). Attracting foreign direct investments through augmented and virtual reality. https://itif.org/publications/2021/08/09/attracting-foreign-direct-investments-through-augmented-and-virtual-reality

Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3), 605-627.

Keller, W. (2021). Knowledge spillovers, trade, and FDI. NBER Working Paper No. 28739. National Bureau of Economic Research. https://www.nber.org/system/files/working_papers/w28739/w28739.pdf

Kenton, W. (2023). Proprietary technology. https://www.investopedia.com/terms/p/proprietarytechnology.asp

Kostova, T., Roth, K., & Dacin, M. T. (2008). Institutional theory in the study of multinational corporations: A critique and new directions. Academy of Management Review, 33(4), 994-1006.

Kurshan, B., & Schoeniger, G. (2022). The entrepreneurial mindset imperative. Forbes Leadership Education. https://www.forbes.com/sites/barbarakurshan/2022/04/12/the-entrepreneurial-mindset-imperative/?sh=154f2ff15b06

McKinsey. (2018). The benefits of buying local: How procurement can boost resilience and sustainability. https://www.mckinsey.com/business-functions/operations/our-insights/the-benefits-of-buying-local-how-procurement-can-boost-resilience-and-sustainability

McKinsey. (2021). Managing strategic partnerships. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/improving-the-management-of-complex-business-partnerships

Michie, J. (2001). The impact of foreign direct investment on human capital enhancement in developing countries. OECD Development Centre. https://www.oecd.org/dev/2731643.pdf

Naumann, E., Fisher, G., & Audretsch, D. B. (2020). Unraveling the entrepreneurial mindset. Small Business Economics, 57, 1681-1691. https://www.emerald.com/insight/publication/doi/10.1108/9781789737011

Neeley, T. (2015). Global teams that work. Harvard Business Review, 93(10), 74-81.

Newman, C., Page, J., Rand, J., Shimeles, A., Söderbom, M., & Tarp, F. (2019). Linked-in by FDI: The role of firm-level relationships for knowledge transfers in Africa and Asia. The Journal of Development Studies, 55(7), 1436-1456. https://www.tandfonline.com/doi/pdf/10.1080/00220388.2019.1585813

Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company: How Japanese companies create the dynamics of innovation. Oxford University Press.

OECD & ILO. (2008). The impact of foreign direct investment on wages and working conditions. OECD-ILO Conference on Corporate Social Responsibility. https://www.oecd.org/investment/mne/40848277.pdf

OECD. (2002). Foreign direct investment for development: Maximising benefits, minimising costs. https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf

OECD. (2004). Knowledge diffusion from multinational enterprises. In OECD Science, Technology and Industry Outlook 2004.

OECD. (2017). Technology exposure. In OECD Science, Technology and Industry Scoreboard 2017: The digital transformation (pp. 116-117). OECD Publishing.

OECD. (2018). Oslo Manual 2018: Guidelines for collecting, reporting and using data on innovation. OECD Publishing.

OECD. (2020, May 4). Foreign direct investment flows in the time of COVID-19. OECD Policy Responses to Coronavirus (COVID-19). OECD Publishing. https://www.oecd.org/coronavirus/policy-responses/foreign-direct-investment-flows-in-the-time-of-covid-19-a2fa20c4/

Piteli, E. E. N. (2018). Foreign direct investment (FDI) and economic development. In D. Teece & M. Augier (Eds.), The Palgrave encyclopedia of strategic management. https://link.springer.com/referenceworkentry/10.1057/978-1-137-00772-8_99

Reyes, J. D., & Atkinson, E. (2018). Connecting local businesses with multinational corporations amplifies the development impact of FDI. The Trade Post. World Bank Group. https://blogs.worldbank.org/trade/connecting-local-businesses-multinational-corporations-amplifies-development-impact-fdi

Scribbr. (2020). What is informal learning? https://www.scribbr.com/methodology/informal-learning/

Taras, V., Baack, D., Caprar, D., Jiménez, A., & Froese, F. (2021). Research: How cultural differences can impact global teams. Harvard Business Review. https://hbr.org/2021/06/research-how-cultural-differences-can-impact-global-teams

Teixeira, T. (2020). S. A Survival Guide for Startups in the Era of Tech Giants. https://hbr.org/2020/02/a-survival-guide-for-startups-in-the-era-of-tech-giants

UKRI. (2020). Knowledge exchange framework. https://www.ukri.org/our-work/supporting-uk-research-and-innovation/knowledge-exchange-framework/

UNCTAD. (2014). World investment report 2014: Investing in the SDGs: An action plan. United Nations Publications.

UNCTAD. (2020). Foreign direct investment and gender inequality: evidence from South Africa. Transnational Corporations, 27(3), 93-114. 2

Whatfix. (2023). 14 types of employee training programs (+benefits, examples). https://whatfix.com/blog/types-employee-training-programs/

WIPO. (2021). What is intellectual property? Retrieved from https://www.wipo.int/about-ip/en/