Is Human Capital a Significant Determinant of Portugal’s FDI Attractiveness?

The paper tests whether human capital is a relevant foreign direct investment (FDI) determinant. Drawing on a large-scale survey of firms located in Portugal, and controlling for firms’ structural (i.e. size, age and industry), strategic (R&D and export intensities) and linkages (density of university contacts) variables, our key finding is that, indeed, human capital exerts a positive and significant influence on FDI attraction. Relevant policy implications emerge from the results of this study, at two main levels: (i) policies intended to stimulate human capital formation; and (ii) as regards FDI-focused policies. These policies are discussed in the light of the Portuguese case.