Factors affecting total factor productivity growth in Sri Lanka
No Thumbnail Available
Date
2013
Authors
Gamage, G.G.S.N.
Kankanamge, A.
Journal Title
Journal ISSN
Volume Title
Publisher
University of Peradeniya
Abstract
Total Factor Productivity (TFP) growth has used widely in the growth literature as a proxy variable to measure technological growth. Using aggregate annual data from 1977 - 2007 this study examines factors affecting TFP growth. In the first stage of the study it computes TFP growth for Sri Lanka in a standard growth accounting framework. In the second stage, the study develops OLS and GLS models to test the effect of FDI, openness, and ICT investment on TFP growth. In all models FDI has a significant and positive effect on TFP growth which is consistent with the literature. Import share variable has only a weak effect on TFP growth which questions the effect of liberal trade policies on TFP growth and needs further investigation. Our conclusion on the effect of government investments on TFP growth is not final as it shows a negative impact. We recommend in depth analysis of the effect of government investments on TFP growth in future studies. Investment in ICT related industries also shows a positive but weaker effect on TFP growth and it could be due to limitations in the data. Overall the results are consistent in all models and consistent with the results of other countries. Policies that attract more foreign investments and ICT related investments can be recommended for TFP growth.
Description
Keywords
Total Factor Productivity Growth , Investment , FDI , Openness , Information and Communication Technology
Citation
Modern Sri Lanka Studies, 2013, IV(1), P 1-20