Globalization, economic crisis and national strategies for higher education development: research papers; Research papers iiep; 2009

able 2.1
, FDI approached the trillion US dollar (US$) mark and generated 
a total of 2.87 million jobs in 2007. The largest bene
fi
ciaries of FDI have been in the Asia-Paci
fi
c 
region, followed by North America and Europe. The Middle East remained the region with the least 
FDI in
fl
ow which may partly be due to the availability of domestic resources in the region. 
Table 2.1 Foreign direct investment and jobs in 2007
Region
Investment
(in billion* US$)
New jobs created
(in millions)
Asia and the Paci
fi
c 
395.2
1.20
Europe and North America
345.1
1.16
Latin America
58.3
0.27
Middle-East 55.9
0.09
Africa 92.0
0.15
Total 946.8
2.87
* Equivalent to one thousand million.
Source:
The Earth Times, 4 March 2008.
The USA was the largest recipient of FDI; in 2007, the country received US$237 billion in FDI, 
accounting for 13.6 per cent of gross domestic product (GDP), and employing 
fi
ve million workers in 
the USA, accounting for 4.5 per cent of private sector employment (
Table 2.2
). Nearly 80 per cent of 
the FDI to the USA came from Europe and Japan in 2006 (United States Department of Commerce 
– USDC, 2008). Among the countries, the UK had the highest FDI in the USA. “China and India 
cemented their key roles as sources of investment (FDI) in 2007, with the two countries now 
accounting for almost 6 per cent of global jobs created from foreign investment, compared to 
4 per cent in 2006” (IBM GBS, 2008).
Table 2.2 FDI and employment generation in selected countries in 2007
Countries
Investment in billion US$
Jobs in millions
USA
237.0
5.00
China 90.4
0.37
India
52.5
0.25
Russian Federation
45.1
0.16
Vietnam
40.2
0.19
Source: 
For USA, USDC, 2008. Other countries: The Earth Times, 4 March 2008.
The development of the software sector is a clear indication of the bene
fi
ts of globalization in India. 
The share of software in India’s exports increased from 4.9 per cent in 1997 to 20.4 per cent in 
2002-2003 and software accounted for US$28.5 billion of export earnings in 2004-2005. The 
sector is expected to create another four million jobs in the future. Countries such as China, India, 
the Russian Federation and Vietnam are the largest bene
fi
ciaries of FDI in
fl
ows and subsequent 
International Institute for Educational Planning www.iiep.unesco.org

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Globalization and demand for skilled labour
13
employment generation. Although the jobs generated by FDI or by outsourcing may not form a large 
share of total national employment, these jobs are associated with high-level skills, high salaries, 
and attracting university graduates. 
With liberalization policies, multinational corporations (MNCs) increased their presence in developing 
countries through the expansion of existing 
fi
rms and the entry of new 
fi
rms. These 
fi
rms look for 
highly skilled workers though, initially, the MNCs were generally engaged in activities which required 
less skilled workers than their parent companies. This trend is changing and these companies, 
located in many countries such as China, India, the Republic of Korea, Malaysia, Singapore, and 
Taiwan, have entered into activities that require highly skilled personnel. They welcome talents from 
national universities, graduates with foreign degrees or degrees awarded by foreign universities in 
the countries hosting these companies. 
The domestic private sector – outsourcing and others – also grew appreciably in the last two 
decades or so. Many of them adopted new technologies, aligned with knowledge-based production 
and the globalization process. Public policy, too, was conducive in promoting these initiatives. These 
technology-intensive 
fi
rms have generated employment which also demanded high-level skills and 
higher education quali
fi
cations. The skill requirements in many of the knowledge-intensive domestic 
enterprises have been similar to the MNCs operating in the country or similar 
fi
rms operating 
abroad. This was also a process of economic integration of the less developed countries to global 
transactions and networks. 
One of the important contributory factors in attracting FDI is an easily available pool of highly skilled 
workers. The attraction of FDI to the USA is because “the American workforce ranks as one of the 
best educated, most productive and most innovative in the world”, and the “USA higher education 
system is unparalleled” (USDC, 2008: 4). This is also the case with regard to the 
fl
ow of FDI to other 
countries. For example, the credit for attracting FDI and for the fast expansion of the software sector 
in India goes to ‘technical young people and English-speaking scienti
fi
c professionals’ (