Skills and Multinational Production

This paper provides new evidence on the role of human capital in shaping economies participation in multinational production. In particular, we primarily examine whether and to what extent the level of English language mastery among countries inhabitants affects the presence of multinational firms in their territories. To do so, we combine data on multinational firms foreign subsidiaries worldwide and data on English proficiency of possible host countries populations. Our estimates suggest that countries whose populations have higher levels of English proficiency attract more multinational firms. The same holds for economies with higher shares of individuals with advanced digital skills.