Foreign Direct Investment and New Business Start-Up in Southeast Asian Countries: Does Education Matter?

Tanaya, Olivia and Suyanto, Suyanto (2024) Foreign Direct Investment and New Business Start-Up in Southeast Asian Countries: Does Education Matter? Montenegrin Journal of Economics, 20 (1). pp. 37-46. ISSN 1800-6698

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Abstract

This paper investigates the impacts of foreign direct investment (FDI) and education on the number of business start-up in Southeast Asian Countries. Several studies have shown that people who attend college or university have a higher possibility of becoming entrepreneurs because they have access to entrepreneurship instructional programs and more assistance for practical activities. On the other hand, increasing education might change people's tendency to start new firms. Higher educated people may have better options for sources of income and less desire to start their own business as a result. Using the panel data of nine Asian countries, it is found that net inflows of FDI promote domestic entrepreneurship. Interesting evidence emerges when education is taken into account, the relationship between FDI and new business start-ups is negatively moderated by the level of education. This research uses two levels of education measurements, namely secondary and tertiary education. It is found that secondary education and tertiary education have different impacts on start-up business. The presence of foreign firms in countries with tertiary education level provides better salary options and therefore triggers workers to choose multinational firms rather than become entrepreneurs. This finding implies that net inflows of FDI in Southeast Asian countries with highly educated workers can influence the determination to start new businesses. These results support evidence that educational level is an essential mediating factor in the linkage between FDI and new business start-ups in Southeast Asian Countries.

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Divisions:	Faculty of Business and Economic > Department of Economic
Depositing User:	OLIVIA TANAYA
Date Deposited:	15 Dec 2023 09:30
Last Modified:	15 Dec 2023 09:30
URI:	http://repository.ubaya.ac.id/id/eprint/45521

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