Human Capital Intensity in Technology-Based Firms Located in Portugal: Do Foreign Multinationals Make a Difference?

Abstract

This paper contributes to the scarce empirical literature on the impact of foreign ownership on human capital intensity. New evidence is provided, based on a comprehensive, large-scale survey of technology-based firms located in Portugal. Using two alternatives measures of human capital (one based on skills, another on education), the key findings are that: (1) foreign ownership directly (and significantly) impacts on firms general human capital (education); (2) foreign ownership indirectly (and significantly) impacts on firms specific human capital (skills); (3) the total impact of foreign ownership on firms’ human capital intensity is higher for education- (general) than for skills- (specific) related human capital intensity. Other findings are that younger and smaller firms tend to be more human capital intensive, and that export patterns are not significantly related to human capital intensity. Giving the critical importance of both FDI and human capital development for an economy like Portugal (lagging behind in terms of human capital stock, and seeming to have lost part of its attractiveness as an FDI location), the paper discusses related policy implications.

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