Foreign Direct Investment and Human Capital Formation

Abstract Objective: The main objective of this paper is to reveal the relationship between foreign direct investment (FDI) and human capital. Methodology: The analysis consists in a presentation of main achievements in the literature regarding the contribution of human capital to the attraction of FDI. Findings: The investment in human capital formation has leaded to the increase of labour productivity. This will ultimately result in economic growth. Education has the most important role in the process of human capital formation. Value added: FDI has an important role to play in human resource development through its ability to enhance new skills, information and technologies in multinational enterprises. In this way, FDI becomes a determinant factor for education and professional training, because it is the link between the immediate reality based on creation, introduction of new skills, new technologies and provision of a wide range of information and initial training direction. Recommendations: The economic policies should focus on the attraction of FDI that ensures the improvement of human capital quality. On the other hand, the education policies should focus on a better connection of the human resources to the requirements of the labour market and to offer acknowledge and practice that will help the graduates to correspond to the expectations of foreign investors.