Soft, hard or smart power? International students and investmentsabroad

This paper analyses the impact of education networks on the FDI from the United States
and United Kingdom to 167 countries during 1999-2011. Proxies of networks are international
students in the US and UK and alumni associations abroad. Results show that international students
boost the British FDI to their home countries, while their influence on American FDI is weak,
except for students from developing economies and for international students who attended
university during the Cold War. Alumni associations have a substantial impact on both American
and British FDI, but especially on the latter. The stronger impact of education networks on British
FDI is partly related to the different political and economic roles played by the US and UK on the
world stage, and to their different use of soft and hard power. Results are robust to different
econometric specifications.