Study Of The Role Of Human Capital To Inward FDI In Algeria And The Ways To Improve It

This study examines the role of HC to inward FDI in Algeria and the ways to improve it.It used annual time series secondary data over the period of 1998-2017.The main objective of the study was to investigate the role of human capital to attract foreign direct investment in Algeria.The literature determines the importance of HC,determinants of FDI and the relationship between HC and inward FDI in Algeria.A multiple regression model was employed to estimate the relationship between the role of HC and inward FDI in Algeria.Accordingly,the study took inward FDI as a dependent variable and HC,corruption and bureaucracy,inflation,political situation,GDP,infrastructure and natural resources as independent variables.Thus,natural resource was a dummy variable.The regression results indicated that the HC,corruption and bureaucracy,political situation have a positive and significant effect on inward FDI in Algeria but HC played a higher role than the others do to attract FDI in the country.A percentage increase in HC would result in 24.55 percent increase in inward FDI in Algeria.On the other hand,infrastructure has a negative effect on inward FDI inflows in Algeria,while political situation,inflation,GDP and natural resource have no any effect on inward FDI in Algeria.The study recommends that Algeria required developing and advancing human capital to accelerate the inward FDI more importantly than other variables since HC play a great role for inward FDI in the country.