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HRD Policies to Promote Training and Spillovers
The above assessment of selected past empirical evidence suggests that firms, in spite of large productivity gains, underinvest in training due to market failures such as credit market constraints, lack of information and labour turnovers. The underinvestment is even more acute among small- and medium-sized domestic firms that tend to have higher productivity gains from training compared to MNEs or large domestic firms. It has also shown that MNEs have numerous channels to improve HRD in host developing countries by training their own workers and facilitating training spillovers. This calls for policy measures to tackle market failures in training and to stimulate training spillovers, especially among domestic small- and medium-sized firms.

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