The Relationship between Communicable Diseases and FDI Flows: An Empirical Investigation

This paper focuses on the impact of communicable diseases, which affects the population health component of human capital on worldwide FDI flows. The model controls for endogeneity that can stem from the interconnected relationship between FDI, population health and per capita GDP. After controlling for this endogeneity, we find that communicable diseases have a statistically significant negative effect on FDI, which is 2 to 5 times larger than when using ordinary least squares. The results remain robust to alternative model specifications.