Foreign Direct Investment and Human Capital Enhancement in Developing Countries

The purpose of the study is to assess the impact of foreign direct investment (FDI) on human resources. Using data for typical countries in East Asia for the period 1995–2020, using regression of least squares (OLS), fixed effects (FEM), and random effects (REM), and at the same time assessing the difference in terms of time and degree of dependence in economic, political, and social relations among countries in the region, the research results confirm that FDI has a positive impact on human capital. The study also confirms the positive impact of financial development and urbanization on the quality of human resources. On the other hand, there is no impact between trade openness and human resource quality improvement.