The Impact of Technological Changes on Partial Factor Productivity of the Asean-5: A Panel Regression Analysis

Abstract

This study examined the impact of technological changes on partial factor productivity represented by labor productivity in the ASEAN-5 from 1997 to 2016. The technological changes is represented by gross expenditures on Research and Development (R&D), access to mobile phones, access to internet and patent applications. The study employed the quatitative research design to determine the cause and effect relationship between the explanatory variables and the explained variable. Based on the fixed effect model regression results, gross expenditures on R&D with first lag was acceptable and statistically significant at 5% level of significance. On the other hand, changes in access to mobile phones, access to internet and patent applications although reflected the expected sign of coefficient were found to be insignificant. Furthermore, 99% of the variations in labor productivity is explained by the variations in gross expenditure on R&D, access to mobile phones, access to internet and patent applications. Based on the findings, the paper recommends for strong government commitment through the Department of Science and Technology to increase gross expenditures on R&D to at least 1% of GDP and encourage more patent applications. The Department of Information and Communications Technology should look into the underlying Information and Communications Technology development plan of Malaysia and Singapore in terms of access to mobile phones and access to internet.