Exploring the Impact of Foreign Direct Investment Accumulation on National Innovation Capability and the Mediating Role of Human Development Level

Abstract

In this study, we scrutinize the effect of inward Foreign Direct Investment (FDI) and Human Development Level (HDL) on National Innovation Capability (NIC). Data from 123 countries are employed for multivariate statistical analyses. We find that both FDI accumulation and HDL significantly and positively influence NIC, and HDL has a mediating effect between FDI accumulation and NIC. Mediating role of HDL vanishes when we divide the data into four HDL groups which are suggested by UNDP. In very high human developed group FDI accumulation and HDL both have a positive and significant effect on NIC. In high human developed group only HDL has a positive and significant effect on NIC while NIC is insensitive to FDI accumulation. In medium human developed and low human developed groups we see that NIC is insensitive to both FDI accumulation and HDL.

Keywords

• Foreign Direct Investment (FDI), Human Development Level (HDL), National Innovation Capability (NIC), Multivariate Statistical Analysis.

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