Dick Durevall: Coxhead and Shrestha address an important question: How does foreign direct investment (FDI) affect schooling? Their answer is that FDI, measured by the relative number of jobs available in foreign-invested enterprises at the district level, makes it much more likely that individuals aged 15 to 19 years drop out of school. The strongest effect is for 17-year-old girls living in urban areas, where a 1 percent increase in the district-level foreign employment rate reduces the probability of school attendance by 4.8 percentage points. For 17-year-old urban boys, it reduces the probability by 2.9 percentage points. The share of employment in foreign-owned firms increased by about 2.5 percent from 2001–09, so, taken at face value, the findings imply that FDI caused a drop in school attendance in urban areas by over 12 percentage points for 17-year-old girls and by over 7 percentage points for 17-year-old boys. The estimates are...

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