The Convergence of Total Factor Productivity in the World: the Role of Technology Diffusion and Institutions

Authors

1 PhD Student in Economics, Department of Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

2 Assistant Professor of Economics, Department of Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

3 Professor of Economics, Department of Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

Abstract

Leading research examines the convergence of total factor productivity (TFP). The main focus of the study is on technology diffusion and institutional quality in the convergence process through which technology diffusion along with trade openness (TO) and foreign trade investment (FDI) variables and their intersection effects as well as the institutional quality with its weighted combination of six global governance indicators and its intersection effect have been assessed. The model is estimated using data from 117 countries in the period 1995 to 2017 and considering the United States as a reference country and with the help of panel data technique. The results reveal that a negative and statistically insignificant relative TFP coefficient; thereby the hypothesized convergence as to the sample countries is confirmed. However, neither the FDI coefficients nor the institutional quality index was statistically significant; while in return TO coefficient showed to be both positive and significant, which is an indication of the importance of this variable in increasing then growth rate of TFP. Similarly, both institutional and TO variables seem to play a role in the convergence process.

Keywords

References

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Geography (Regional Planning)
Volume 11, Issue 45
December 2021
Pages 794-805

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