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Foreign direct investment and total factor productivity in South Asia

Author

Listed:
  • Zaira ADNAN

    (Western Sydney University, Australia)

  • Mamta CHOWDHURY

    (Western Sydney University, Australia)

  • Girijasankar MALLIK

    (Western Sydney University, Australia)

Abstract

This study attempts to find the effect of foreign direct investment on total factor productivity (TFP) for the four major South Asian economies namely Bangladesh, Pakistan, India and Sri Lanka considering other variables such as human capital, trade openness, government expenditure and CPI as significant determining factors for TFP. The results suggest that FDI is an important determinant of TFP in South Asian region and has a significant positive impact. FDI, trade openness, government expenditure and inflation all affect TFP in the long run for all the countries under study. However, the effect of human capital on TFP in case of Bangladesh’s and Sri Lankan economy is negative. South Asia needs to promote intra-regional trade and economic policies to increase foreign investment. The countries under study are labor intensive economies and labor productivity in the region can be improved through specialized skill development programs.

Suggested Citation

  • Zaira ADNAN & Mamta CHOWDHURY & Girijasankar MALLIK, 2019. "Foreign direct investment and total factor productivity in South Asia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(619), S), pages 105-120, Summer.
    • Handle: RePEc:agr:journl:v:xxvi:y:2019:i:2(619):p:105-120
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    References listed on IDEAS

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    Cited by:

    1. Mehmet Akyol & Emrullah Mete, 2021. "The Relationship Between Labor Productivity, Exports, and Foreign Direct Investment for Transition Economies," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 8(2), pages 155-171, July.
    2. Sanjoy Kumar Saha, 2021. "Sources of Total Factor Productivity in South Asia," Review of Market Integration, India Development Foundation, vol. 13(2-3), pages 154-176, December.

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