THE IMPACT OF HUMAN CAPITAL AND SKILL AVAILABILITY ON ATTRACTION OF FOREIGN DIRECT INVESTMENT (FDI) INTO REGIONS WITHIN DEVELOPING ECONOMIES

When making a strategic location choice multinational corporations (MNCs) examine a number of conditions which influence the investment before settling on the location choice that includes human capital and availability of skilled workforce. This paper will test the importance of the relationship between geographic distribution and clustering of foreign firms and the influence of human capital and skill present in the regions, generally represented by major cities, on the location choice strategy and innovation activity of foreign investors across regions in the host economy of a developing nation. Testing the data on the location of foreign firms and skilled workforce (among other factors) in the regions across Poland, this study finds that a higher level of presence of skilled workforce in the regions tends to attract higher value-added and service-related foreign subsidiaries into them hence, furthering the development of the host cities and regions.Also, the industries with higher amounts of foreign investment tend to narrow their industrial specialization, in some regions including also smaller regions such as Podkarpackie, while Mazowieckie (the leading region) continues to attract higher value-added and service FDI despite the highest labor cost.