Trade Openness, Social Capital and Total Factor Productivity in Tobacco Industry

Abstract

Objectives: The tobacco industry makes crucial contributions to local fiscal revenue and thus how to improve the productivity of tobacco industry has gain great attention by scholars, entrepreneurs, and governments. The present study attempts to explore the role of trade openness and social capital in the improvement of total factor productivity (TFP) focusing on tobacco industry. Methods: The present study firstly proposed an estimation model under the framework of new growth theory, and then taking tobacco industries in the top fifty cities in China’s GDP list as examples, the present study conducted an empirical study using regression analysis methodology. Results: The results demonstrated that social capital contributes to enhancing the utilization effectiveness of material capital in tobacco industry, and it has a more direct influence on total factor productivity relative to tobacco industry economic performance. The influence of trade openness and social capital on TFP in tobacco industry is moderated by the present industry economic performance. Conclusion: Both trade openness and social capital play critical roles in promoting the productivity of tobacco industry and the entire industrial economic development. This study thus has practical implications for both tobacco enterprise managers and local governments, and enriches the theory relating to social capital.