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Frontier Technology, Trade, FDI, and TFP in the Electrical and Electronic Industries: Exporting or Processing Trade?

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  • Noor Aini Khalifah

    (Faculty of Economics and Management Universiti Kebangsaan Malaysia 43600 UKM, Bangi, Selangor, Malaysia)

Abstract

Does "openness" determine "catching-up" of establishments to frontier technology and total factor productivity (TFP) in Malaysia's electrical and electronic (E and E) industries? We contribute to this debate by applying a new measurement of processing trade intensity. Utilizing stochastic frontier analysis and Levinsohn and Pertrin (LP) TFP, we investigate determinants of technical efficiency (TE) and TFP. The results show that processing trade intensity and not export intensity determines TE and TFP for the overall sample and subsample of foreign establishments. In the processing trade subsample, export intensity is negatively related to TE and unrelated to TFP, obtaining an unconventional result that exporters are inefficient and not associated with TFP. The results show that higher foreign ownership shares of establishments are negatively associated with LP TFP.

Suggested Citation

  • Noor Aini Khalifah, 2022. "Frontier Technology, Trade, FDI, and TFP in the Electrical and Electronic Industries: Exporting or Processing Trade?," Asian Economic Papers, MIT Press, vol. 21(1), pages 110-132, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:21:y:2022:i:1:p:110-132
    DOI: 10.1162/asep_a_00847
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