The influence of human capital investment on the exports of services and goods: An analysis of the top 25 services outsourcing countries

Abstract

Abstract and Key Results With the rise of the global service economy, and understanding of the export competitiveness of nations is critical for managers seeking offshore export locations, and for government policy makers who wish to bolster the attractiveness of their nation as an exporting location. Services globalization — reflected in the growth of outsourcing and offshoring — calls into question the role of human capital investment, whose effect in past studies has been mixed. Drawing on human capital theory, we developed three propositions and analyzed the effect of human capital investment, infrastructure, and the business environment on the export of services and goods from 25 countries from 1989 to 2003. Human capital did have a significant effect on the exports of goods and services. However, contrary to the expectations of human capital theory, human capital was not significantly more important for services exports than for goods exports. In line with expectations of human capital theory, human capital investment had a greater effect in emerging Asia than in developed countries. These findings have important implications for managers and future research.