Human Capital and Foreign Direct Investment: Lessons for Pakistan

Foreign direct investment plays a key role in economic development of all countries. Because of its enormous importance, a large number of empirical studies has focused on finding out the factors determining foreign direct investment. Level of human capital development is one of the major factors influencing foreign inflows. However, earlier studies examining impact of human capital on foreign investment inflows has majorly used literacy rate, school enrolment and government spending on education as its proxies. This paper also examines the impact of human capital as determinant of foreign direct investment. Contrary to earlier empirical studies, it uses cognitive skills as proxy for human capital. Cognitive skills measure the quality of education instead of literacy rate or government spending on education as proxy for human capital. Results indicate that human capital has significant positive effect on foreign direct investment for sample countries. This result is robust to disaggregated data for developed and developing countries. Other factors that determine foreign direct investment inflows are inflation, capital account openness, trade account openness and real income. Based on empirical results, it is recommended that the relevant authorities must make human capital as part and parcel of strategies aimed at augmenting economic growth in the country. There is also a lesson for a developing country like Pakistan to focus more on quality of education instead of school enrolment or education spending for attracting foreign direct investment to boost economic activity (J.E.L Classification Codes: O4, O15, P22).

Sierpinski cubical singular homology for finite spaces

In this paper, we have developed a homology theory for finite spaces based on functions from Sierpinski topological space and its product topology to the finite space under consideration, which was called Sierpinski-cubical-singular homology. This homology satisfied all the Eilenberg-Steenrod axioms of homology theory' and thus isomorphic to the well-known homology theories such as simplicial homology theory, singular homology theory, etc. for finite spaces