Foreign Capital, Human Capital, and Efficiency: A Stochastic Frontier Analysis for Developing Countries

Mastromarco, Camilla; Ghosh, Sucharita

doi:10.1016/j.worlddev.2008.05.009

Cited by 63 publications

(62 citation statements)

References 62 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…We start with model 1 in which human capital (years of schooling) is taken as a factor of production and R&D is assumed to depreciate at 5%. In model 2, we change the R&D depreciation rate to 10% (Kneller & Stevens, 2006;Mastromarco & Ghosh, 2009). Models 3-5 all have 10% R&D depreciation rates.…”

Section: Resultsmentioning

confidence: 99%

“…Complementing Henry, et al (2009 and Mastromarco and Ghosh (2009) on technical efficiency, our paper is the first to study both inward FDI and imports as channels for foreign R&D transfer systematically. Comparing the impact of inward FDItransferred R&D to the impact of imports-transferred R&D, we can also draw inferences on, for example, which one has a larger influence on technical efficiency.…”

mentioning

confidence: 94%

“…The authors find that trade is an important channel for international technology diffusion, which increases the individual country's ability to move toward its production frontier. The results are echoed in Mastromarco and Ghosh (2009). Based on panel data from 57 LDCs from 1960-2000, Mastromarco and Ghosh find that inward FDI, imports, and foreign R&D transferred through imports all have a positive effect on a domestic country's technical efficiency.…”

mentioning

confidence: 99%

“…Typically, all countries are assumed to be perfectly efficient and operate on their production frontier as Mastromarco and Ghosh (2009) note, "the use of the residual as technical change is reasonable only if all countries are producing on their Frontier" (p491) (see also Kumbhakar & Lovell, 2000).…”

mentioning

confidence: 99%

See 3 more Smart Citations

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

Wang

Wong

2012

World Development

View full text Add to dashboard Cite

Summary. -We study the effect of foreign R&D transferred through imports and FDI on domestic technical efficiency using stochastic frontier analysis. Unbalanced panel results from a 77-country sample over 1986-2007 show that FDI-and imports-transferred foreign R&D have a significant impact on domestic country's technical efficiency. Furthermore, we observe a complementarity between FDI-transferred R&D and domestic human capital. In other words, the domestic country needs to obtain a threshold level of human capital to benefit from FDI-transferred R&D. Other macro conditions such as infrastructure, political stability, and urbanization also help to improve the technical efficiency of a country.

show abstract

Section: Resultsmentioning

confidence: 99%

mentioning

confidence: 94%

mentioning

confidence: 99%

mentioning

confidence: 99%

See 2 more Smart Citations

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

Wang

Wong

2012

World Development

View full text Add to dashboard Cite

show abstract

“…A number of studies find that FDI has an impact on improving an economy's efficiency via transferring technology (see Iyer et al (2008), Mastromarco and Ghosh (2009), and others). For example, a local labour force gains more skills through training received from foreign firms, or local firms adopt new technologies brought by foreign companies.…”

Section: Empirical Studymentioning

confidence: 99%

Model specification, estimation and inference in studying economic output

Dung¹

View full text Add to dashboard Cite

The first aim of this thesis is to expand a range of econometric models available to investigate the behaviours and the drivers of economic output (e.g. real Gross Domestic Product (GDP)), labour productivity growth (real GDP per capita)). The second aim is to develop algorithms to estimate the proposed models. The third aim is to develop an inferential framework for each proposed model.Chapter 2 generalises some of the existing methods to account for statistical noise in the estimation of a frontier, and to gain new insights on the drivers of labour productivity growth. We apply the model specification to the data set used in Kumar and Russell (The American Economic Review, 2002). We confirm that capital deepening is the main source of labour productivity growth, and also is the factor driving the transformation of the distribution of labour productivity from one single mode density to a density of two modes. When accounting for statistical noise in the estimation of the frontier, we find that capital deepening does not contribute to growth convergence, but instead efficiency change is a driver of growth convergence. The results indicate that improving technical efficiencies might reduce the gap between the poor and the rich.Chapter 3 proposes a non-linear state space stochastic frontier model which provides a researcher a tool to jointly model the dynamic effects of environmental variables on both a production function and an inefficiency term. A test for time-variation in technical inefficiencies is also provided. We apply the proposed model to the economic study of 21 OECD countries. We wish to investigate under what channels foreign direct investment (FDI) affects a production process: through a production function, an inefficiency term, or both. The results show that FDI plays more important role in influencing the shift of the production frontier rather than the distribution of technical inefficiencies. This is to suggest that an output growth of an economy might further increase by investing FDI in innovation to improve technological change (shift of the frontier). We find statistical evidence in favour of time-variation in technical inefficiencies, and the temporal effect therefore should not be ignored in measuring technical inefficiencies.Chapter 4 considers an econometric model where interdependent relationships between GDP and other key macroeconomic variables are allowed. We achieve impulse response functions of some key macroeconomic variables from a large VAR model with 119 variables. The precision of estimating a such large VAR model is obtained by using a dimension reduction approach, namely a reduced rank regression which has a specification independent to the order of the variables. The impulse responses of a selection of macroeconomic variables to a contractionary monetary policy have expected sign. For instance, a contractionary monetary policy is followed.i by a decrease in GDP, price level and an increase in unemployment rate. The results support the conventional channel of the e...

show abstract

Effect of FDI and Time on Catching Up: New Insights from a Conditional Nonparametric Frontier Analysis

Mastromarco

Simar

2014

J of Applied Econometrics

Self Cite

101

View full text Add to dashboard Cite

We use an appropriate nonparametric two-step approach on conditional efficiencies to investigate how foreign direct investment (FDI) and time affect the process of catching up. By using a dataset of 44 countries over 1970-2007, we explore the channels under which FDI fosters productivity by disentangling the impact of this factor on the production process and its components: impact on the attainable production set (input-output space) and the impact on the distribution of efficiencies. We extend existing methodological tools-conditional nonparametric efficiency measures-to examine these interrelationships. We emphasize the usefulness of smoothing over time to better analyze the potential dynamic influence of FDI on efficiency. We find that both FDI and time play an important role as influencing efficiency distribution and affecting, to a smaller extend, the production set. This effect of FDI does not seem to vary much over time. By the second-stage nonparametric regression of the conditional efficiencies over FDI and time we identify clearly the effect of time and FDI on conditional efficiency and we determine idiosyncratic efficiency, which represents the'Solow residual', measured by looking to the unexplained part of the conditional efficiencies.

show abstract

Foreign Capital, Human Capital, and Efficiency: A Stochastic Frontier Analysis for Developing Countries

Cited by 63 publications

References 62 publications

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

Model specification, estimation and inference in studying economic output

Effect of FDI and Time on Catching Up: New Insights from a Conditional Nonparametric Frontier Analysis

Contact Info

Product

Resources

About