Trade Openness, Structural Change and Total Factor Productivity

2009 ◽  
Vol 23 (4) ◽  
pp. 545-559 ◽  
Author(s):  
Sohrab Abizadeh ◽  
Manish Pandey
Keyword(s):  
Structural Change ◽  
Total Factor Productivity ◽  
Trade Openness ◽  
Factor Productivity

Total Factor Productivity Growth: Evidence from West African Economies

2019 ◽  
pp. 097215091985619 ◽  
Author(s):  
Isaac Abekah-Koomson ◽  
Pang Wei Loon ◽  
Gamini Premaratne ◽  
Teo Siew Yean
Keyword(s):  
Economic Growth ◽  
Total Factor Productivity ◽  
Trade Openness ◽  
Stochastic Frontier ◽  
Spillover Effect ◽  
Political Stability ◽  
Optimal Level ◽  
West African ◽  
Factor Productivity ◽  
African Region

Since the 1990s, the economic growth of the West African region has been remarkable, with average GDP growth of 5 per cent annually. In view of that, this article investigates the Total Factor Productivity (TFP) performance for the Economic Community of West African States (ECOWAS) region, which takes into account the recent development on political stability and trade openness. There were also periods when TFP fell sharply, the most significant happened in the late 1990s and 2000s where TFP dropped significantly which might be attributed to the spillover effect of the Asian and global financial crises. Our results showed that TFP was performing well for the region as well as for each member countries for the period of the study. We acknowledged that the estimated TFP in our model captures other factors such as human capital, health and other institutional factors that could affect economic growth. We also estimated the Technical Efficiency (TE) for the ECOWAS region using the Stochastic Frontier Modelling and the result indicates that the TE performance is well below the optimal level of production.

In search of structural change surplus and perpetual growth in Ethiopia

2016 ◽  
Vol 7 (2) ◽  
pp. 241-255 ◽  
Author(s):  
Zerayehu Sime Eshete ◽  
Peter Kiko Kimuyu
Keyword(s):  
Structural Change ◽  
Total Factor Productivity ◽  
Service Sector ◽  
Sustainable Growth ◽  
Growth Options ◽  
Factor Productivity ◽  
Content Type ◽  
Growth Option ◽  
Current Path ◽  
Sectoral Growth

Purpose – The Ethiopian economy is characterized by erratic and poor performance with negative growth rates, seven times over the period 1981-2010. This trapped per capita income at 358 USD in 2010 staying far away from middle-income country status. A lot of unsolved debates regarding perpetual growth, structural change and sectoral allocation of resource emerged overtime. The purpose of this paper is to examine the alternative effects of induced sectoral total factor productivity and makes comparisons of various sectoral growth options. Design/methodology/approach – This study uses a recursive dynamic computable general equilibrium model based on neoclassical-structuralist thought. It also calibrates coefficients that capture the impacts of openness, imported capital and liberalization on sectoral total factor productivity growth using a model of vector auto-regressive with exogenous variables. Findings – Future economic growth rate is expected to grow at a declining trend and to be dominated by the service sector. If it keeps growing on the current path it will expose the economy to a severe structural change burden problem. Openness induced agricultural total factor productivity highly improves the welfare of households while imported capital goods induced industrial total factor productivity is also better in fostering structural change of the economy. The broad-based growth option that combines the induced total factor productivity of all sectors also enables the economy to achieve more sustainable growth, rapid structural change and welfare gain at the same time. Originality/value – There are intensive and charged debates regarding alternative sectoral growth options. However, the debate does not derive from a rigorous analysis and holistic economy-wide approach. It is rather affiliated with politics. Therefore, the paper is original and investigates these issues meticulously.

scholarly journals Macroeconomic determinants of total factor productivity and its trend in Ethiopia

2019 ◽  
Vol 8 (6) ◽  
pp. 219-228
Author(s):  
Adisu Abebaw Degu ◽  
Dagim Tadesse Bekele
Keyword(s):  
Foreign Direct Investment ◽  
Total Factor Productivity ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Government Expenditure ◽  
Series Data ◽  
Factor Productivity ◽  
Macroeconomic Factors ◽  
Long Run

Total factor productivity (TFP) as a source of economic growth, has been recognized in economic theory for a long period of time. In this research we tried to examine the effect of some macroeconomic factors, which include trade openness, inflation, government expenditure, credit extended and foreign direct investment, and natural disaster drought on total factor productivity and its trend in Ethiopia by using Time series data spanning from 1991 to 2018.  The TFP was computed by using the growth accounting method from Cobb–Douglas production function.  ARDL was used for estimation of the short and long run econometric model.  Accordingly, the trend analysis shows the growth in TFP has been fluctuating over the study period. The result from ARDL indicated that; in long run foreign direct investment, government expenditure and drought negatively and significantly affect TFP. Credit extended is found to affect TFP positively and significantly, while inflation and trade openness are insignificant. Therefore, policies such as; subsidizing domestic firms, effective government spending and making the agriculture sector drought resistant need to be stimulated.

scholarly journals Trade Openness and Green Total Factor Productivity in China: The Role of ICT-Based Digital Trade

2021 ◽  
Vol 9 ◽  
Author(s):  
Huan Zhang
Keyword(s):  
Total Factor Productivity ◽  
Scale Effect ◽  
Trade Openness ◽  
Estimation Method ◽  
Policy Implications ◽  
Structure Effect ◽  
Factor Productivity ◽  
Estimation Model ◽  
Promoting Effect ◽  
The Impact

The vigorous development of modern information and communication technology (ICT) has driven the digital trade featured by the ICT technique and industry as the carrier. This study empirically tests the impact of ICT-based digital trade openness on green total factor productivity (GTFP) by selecting ICT as the representative digital trade data of 30 provinces in China over the timespan 2002–2018. We employ the slack-based model and global Malmquist–Luenberger (SBM-GML) estimation method to calculate the provincial GTFP and explore the heterogeneous impact of digital trade openness on GTFP through the scale effect, technology effect, and structure effect. In terms of empirical results, the panel fixed model and panel quantile estimation model both suggest the same findings. With the continuous expansion of the scale of digital trade, its scale effect has a significant inhibitory effect on GTFP, whereas the structure effect combined with human capital and the technology effect correlated with technological research and development (R&D) have a significant promoting effect on GTFP. The panel quantile regression model reveals that the interaction intensity increases gradually from a low quantile to high quantile. Further robustness tests also verify the consistency and stability of the results. Finally, the study puts forward corresponding practical suggestions for the construction of a high-quality open pattern of digital trade and the coordinated development of GTFP. The specific policy implications include the following: (1) Emphasize on the penetration and connection effect of the new generation of ICT, and strengthen the construction of enterprise informatization. (2) Expand digital trade openness and broaden the field of industrial cooperation. (3) Optimize the industrial structure of digital trade, and accelerate the development of core industries of digital trade. (4) Gradually promote the transformation of digital trade from relying on quantity and scale to product quality.

scholarly journals Macroeconomic Determinants of Saudi Total Factor Productivity

2017 ◽  
Vol 5 (1) ◽  
pp. 37 ◽  
Author(s):  
Wael Mousa
Keyword(s):  
Total Factor Productivity ◽  
Capital Accumulation ◽  
Negative Impact ◽  
Growth Models ◽  
Trade Openness ◽  
Technological Advancement ◽  
Factor Productivity ◽  
Economic Stability ◽  
Private Credit ◽  
Macroeconomic Determinants

Traditionally, labor productivity has been modelled as driven by capital accumulation, and the technology issue is exogenous. However, this model has been unable to sufficiently explain growth, and recent thinking on growth has given prominence to other factors such as technological advancement, human capital, and research and development. This has led to new growth models. This study employed the conventional growth accounting framework and aimed to estimate the total factor productivity in Saudi Arabia from 1970 to 2015. Additionally, it aimed to explore the macroeconomic determinants that affect total factor productivity. The results confirmed that economic stability, trade openness, and human factor development have positive impacts on total factor productivity. Interestingly, private credit by banks has a negative impact on Saudi total factor productivity. Negative relationships were also found between total factor productivity and the variables of population growth and government consumption.

scholarly journals Linkages between Trade Openness, Productivity and Industrialization in Nigeria: A Co-integration Test

2017 ◽  
Vol 8 (2) ◽  
pp. 78
Author(s):  
Ilemona Adofu ◽  
Innocent Okwanya
Keyword(s):  
Total Factor Productivity ◽  
Impulse Response ◽  
Response Function ◽  
Trade Openness ◽  
Impulse Response Function ◽  
Policy Implications ◽  
Industrial Output ◽  
Factor Productivity ◽  
Long Run ◽  
Integration Test

This study examines the effect of trade openness and total factor productivity on industrial output in Nigeria. The data used for this analysis covers the period 1981-2015. The paper employs the VAR model in estimating the effect of trade openness on industrial output. The impulse response function and the variance decomposition are used to examine the response of industrial output to shocks in trade openness and total factor productivity. The results show that trade openness has a positive increasing effect on industrial output in Nigeria while the effect of total factor productivity on industrial output is found to be insignificant. The impulse response function shows over the long run period tfP negative effect on industrial output in Nigeria. The findings of this study certainly have important policy implications: it suggests that policies geared towards increasing trade openness should be encouraged as this tends to improve industrial output. This study contributes to economics literature by looking at the degree to which trade openness and total factor productivity influence industrial output in Nigeria.

scholarly journals Total Factor Productivity and Openness in Indian Economy: 1970–2011

2018 ◽  
Vol 54 (1) ◽  
pp. 46-57 ◽  
Author(s):  
Salman Haider ◽  
Aadil Ahmad Ganaie ◽  
Bandi Kamaiah
Keyword(s):  
Granger Causality ◽  
Total Factor Productivity ◽  
Trade Openness ◽  
Physical Capital ◽  
Causal Link ◽  
Factor Productivity ◽  
Causality Test ◽  
Lower Efficiency ◽  
Indian Economy ◽  
Distributed Lag

The present article aims to explore the causal link between total factor productivity (TFP) and openness in the Indian economy during the period 1970–2011. The study employs the cointegration and error-correction approach, along with Granger causality test. The TFP index used in the study is based on the Tornqvist index and export plus import as a percentage of GDP is used as a measure of openness. It is found that trade openness is cointegrated with TFP using the autoregressive distributed lag (ARDL) method. In the short run, there is evidence of unidirectional Granger causality running from trade openness to total factor productivity. The finding suggests that heavy protection for the domestic industry would deprive the country of efficiency gains in the long run. The resultant effect would be the wastage of resources. For a developing country, lower efficiency levels will halt the process of development. However, enhancement of TFP can not only be due to increase in trade, along with it, the investment in human and physical capital are also better avenues to be taken care of. JEL Codes: F10 O40 O33 C22

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