Technology Gap and the Effect of Foreign Direct Investment on Total Factor Productivity (Case Study: Iran’s Industry)
If the technology gap between counties is narrow, the foreign direct investment (FDI) will have a greater impact on total factor productivity (TFP) because of technological spillovers. In this study, regarding the technology gap, the impact of FDI from nine selected OECD countries on TFPs in eigh...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
| Published: |
Tarbiat Modares University
2020-06-01
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| Series: | پژوهشهای اقتصادی |
| Subjects: | |
| Online Access: | http://ecor.modares.ac.ir/article-18-33242-en.pdf |
| Summary: | If the technology gap between counties is narrow, the foreign direct investment (FDI) will have a greater impact on total factor productivity (TFP) because of technological spillovers. In this study, regarding the technology gap, the impact of FDI from nine selected OECD countries on TFPs in eight industrial subsectors of Iran is examined using panel threshold model during 2002-2015. To estimate this model, at first step, a Cobb-Douglas production function was estimated by ARDL approach, and TFPs were calculated. Then, technology gap as ratio of foreign to domestic TFPs were computed. The estimation of panel threshold model indicated that if technology gap between FDI recipients and donors is narrow, the effect of FDI on TFP will be high in industrial subsectors. In addition, estimating the coefficients of the variables independent of the regime indicated interesting results contrary to the theoretical expectations about the productivity of the industrial sector. The human capital and R&D expenditure had insignificant coefficients. These findings can be can be justified with the low quality of human capital, inadequate expenditure of industrial sector on R&D activities, and economic sanctions which raise the uncertainty and worsen the stagnation. Upgrading human capital in the industrial sector through on-the-job training, or encouraging workers to participate in overseas training courses are recommend to reduce the technological gap and to improve the attraction of FDI. |
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| ISSN: | 1735-6768 2980-7832 |