Total Factor Productivity In Countries Research Articles

Unveiling the impact of remittances on productive efficiencies: investigating productivity growth of prominent remittance-receiving developing nations

PurposeThe present study reviews the theoretical and empirical literature about the significance of international migrants' remittance to empirically analyse the effect of remittance on the productivity growth of developing countries using a panel dataset from 1991 to 2021.Design/methodology/approachThe study utilised the data envelopment analysis (DEA)-based Malmquist Productivity Index (MPI) to measure nationwide production efficiencies. It first performed a unit root test, cointegration test and pool mean group autoregressive distributed lag (PMG-ARDL) technique. To assess the robustness of the findings, the study also uses dynamic ordinary least squares (DOLS) and fully modified OLS (FMOLS) estimators.FindingsThe results demonstrated that remittances are a significant source of funding that promotes innovation [i.e. technological progress (TEC)] and hastens the country's total factor productivity (TFP) growth. However, the study needed to have established the effect of inward remittances on the nation's technical efficiency (EFF).Research limitations/implicationsAs remittances encourage innovation and TFP growth (TFPG), the concerned governments must create favourable and enabling economic environments to increase remittance inflows, which will have far-reaching growth repercussions.Originality/valueThe present study emphasises the connection between remittances and productivity growth, the disintegration of TFP, advanced econometric techniques and contribution to research policy. Despite prior literature exploring the effect of remittances on economic growth, a dearth of literature exists on how remittances affect a country's productivity. The output-based MPI methodology used in this study offered a nuanced understanding of how remittances affect many facets of productivity growth in developing nations.

Державне фінансування освіти як фактор економічного зростання

The main approaches to the analysis of the impact of education on economic growth consist in assessing the link between economic growth indicators (GDP/GDP growth per capita) and three groups of educational indicators: quantitative ones (educational attainment – coverage of population by an education level), qualitative ones (standardized grades of students) and the amounts of educational funding. At the same time, educational attainment and the quality of knowledge obtained depend on the amount of educational funding. The article proves that there is a significant positive relationship between indicators of state funding of higher and secondary education per student and a country's total factor productivity. At the same time, there is no unified optimal scheme for the distribution of public funding between the educational levels: to accelerate the pace of economic growth, some countries prioritize primary education, others – secondary or higher education. As stated in the article, this depends on the country's technological level, the existing educational and professional structure of human capital, and such contextual factors, as the quality of institutions in the country. The article discusses practical approaches to financing various levels of education at the expense of public and private funds, where the latter are presented in the context of private funds, and state transfers to families with students – that is public-to-private transfers. The article concludes that public educational funding – both direct and in the form of public-to-private transfers – concidered at various levels, indicates prioritization of the specific educational and professional composition of human capital. The results of the study indicate the need to harmonize approaches to budgetary processes in the field of educational funding with a country's technological, qualificational, and institutional prerequisites, as well as with strategic forecasts of the socio-economic development of national economies.

Impact of China’s OFDI on Green Total Factor Productivity of Countries along the “Belt and Road”

FDI is an important channel for technical communication and a common method for pollution transfer. With the rapid growth in investment to the Belt and Road” region, how China’s OFDI affects the green total factor productivity of countries in that region is not only a common concern of the international community, but also directly determines whether the Green Belt and Road” initiative can be further advanced. In this paper, the directional distance function considering undesired output is used under the DEA framework, and the green total factor productivity of 56 countries in that region is measured by using the Global Malmquist-Luenberger productivity index. On this basis, the paper utilizes the two-way fixed effect model, quantile regression model and panel threshold regression model to test the effect of China’s OFDI on green total factor productivity of different countries. The paper concludes that: First, China’s OFDI has significantly promoted the growth of green total factor productivity in host countries, while the overall investment from other countries has significantly inhibited the growth of green total factor productivity in host countries. Second, by attracting China’s OFDI, absorbing and assimilating China’s advanced technologies, there has been a strong boost to the growth of green total factor productivity in the countries which rank the last 60% in the green total factor productivity; contrastively, for the top 40% countries, China’s direct investment has not promoted local green economic development significantly. Third, China’s OFDI has a threshold effect of economic scale and human capital on regional green total factor productivity, but the difference in infrastructure quality has not caused the nonlinear impact of China’s OFDI on the green total factor productivity of countries. Even so, promoting infrastructure construction will indeed help to strengthen the resource integration and accelerate the development of green economy in the Belt and Road” region, and this also reflects the value of the establishment of the Asian Infrastructure Investment Bank under the Belt and Road” initiative. To sum up, this research not only positively responds to the doubts about China’s investment motives, and dispels the anxiety” of countries along the line, but also lays the foundation for China to establish the image of a responsible investment entity.

Getting Japan Back on the Sustainable Growth Path: Lessons from the Koizumi Era

I examine the Koizumi Junichiro era in Japan to derive lessons for the current Abe Shinzo administration that vows to get Japan back on the path of sustainable growth. Standard growth theory identifies total factor productivity (TFP) as the key to sustainable growth. The existing empirical evidence clearly indicates that economic recovery during Koizumi's tenure was accompanied by robust growth of TFP. To account for this improvement in TFP performance, I focus on developments during Koizumi's term: promotion of competition by introducing market discipline to various sectors of the economy, effectiveness of market entry and exit, and use of foreign competitive pressure to enhance domestic efficiency. KEYWORDS: Japanese economy, Koizumi Junichiro, Abenomics, total factor productivity.IN THE MIDST OF MOUNTING FEAR OF A THIRD LOST DECADE OF growth for Japan, newly elected prime minister Abe Shinzo aptly placed the priority of his first cabinet on reviving the economy following the landslide victory of his Liberal Democratic Party (LDP) in the general election of December 2012. His government has unveiled three of his economic program, dubbed Abenomics. The first two arrows involve pursuit of a dramatic regime change at the Bank of Japan as well as big fiscal spending to reflate the economy and jump-start its growth. Although these expansionary macroeconomic policies have thus far been effective in giving an initial boost to aggregate demand and reversing the deflationary trend, their initial impact may already be waning. In order to get the economy firmly back on a sustainable growth path, the Abe administration has yet to fill in the third arrow before its first two arrows eventually fizzle out.According to standard growth theory, total factor productivity (TFP) is the key to long-term economic growth as its growth rate represents the slope of the steady-state growth path. Economic growth is not sustainable and is destined to wind down if it is not accompanied by TFP growth. Therefore, the theory suggests that in order for Japan to have a successful growth strategy, the third arrow of Abenomics should aim at improving the country's TFP. Since reform proposals offered so far in Abe's two attempts to shoot the third arrow were generally viewed as modest and ambiguous, the third arrow obviously requires a more focused approach so that it clearly demonstrates the potential to liftthe country's TFP.I argue that Prime Minister Abe may not have to look further than the immediate predecessor of his earlier term in office to find valuable lessons for his growth strategy. Under the premiership of Koizumi Junichiro (2001-2006), Japan was poised to exit its long-running recession and head toward sustainable growth. To be sure, Koizumi's term was never free from controversy and is still the subject of frequent criticism. However, careful analysis of this period through the lens of standard economic growth theory reveals interesting policy implications.The Japanese Economy Under KoizumiKoizumi the Reformer?One word that was never in short supply in public discourse throughout Koizumi's term was reform. Entering the race for the premiership in 2001, Koizumi presented himself as a true reformer who would pull Japan out of its economic malaise. He pledged to put an end to the bad debt problems of the banking sector, clean up the decadelong financial mess, and stand up to the entrenched government bureaucracy by (among other things) privatizing the country's postal savings system.Koizumi was not the first prime minister to talk about the country's need for structural reform. The Big Bang in the Japanese financial sector had already started as early as November 1996 when then Prime Minister Hashimoto Ryutaro announced wide-ranging financial deregulation measures. In fact, deregulation was already high on the policy agenda under the premiership of Murayama Tomiichi, a predecessor of Hashimoto. …

International R&D Spillovers, Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model

We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers.

International R&D spillovers

A model is presented based on recent theories of economic growth that treat commercially oriented innovation efforts as a major engine of technological progress. We study the extent to which a country's total factor productivity depends not only on domestic R&D capital but also on foreign R&D capital. Our estimates indicate that foreign R&D has beneficial effects on domestic productivity, and that these are stronger the more open an economy is to foreign trade. Moreover, the estimated rates of return on R&D are very high, both in terms of domestic output and international spillovers.

International R&D Spillovers

Investment in research and development (R&D) affects a country's total factor productivity. Recently new theories of economic growth have emphasized this link and have also identified a number of channels through which a country's R&D affects total factor productivity of its trade partners. Following these theoretical developments we estimate the effects of a country's R&D capital stock and the R&D capital stocks of its trade partners on the country's total factor productivity. We find large effects of both domestic and foreign R&D capital stocks on total factor productivity. The foreign R&D capital stocks have particularly large effects on the smaller countries in our sample (that consists of 22 countries). Moreover, we find that about one-quarter of the worldwide benefits of investment in R&D in the seven largest economies are appropriated by their trade partners.