The human capital demography index is measured as geometric mean of the composite indices of working population growth
rate and number of new entrants in universities. This index captures the availability of human capital in near future i.e. in mediumrun.
We predict that FDI is concentrated in the regions with higher possibility of future growth. Human capital productivity
index is the composite index of gross industrial output per working population.
Keeping other things constant, multinational
companies would be interested in investing in the regions with higher per capita industrial output, therefore FDI is positively
associated with higher productivity.