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Determinants of total factor productivity in former Soviet Union economies: A stochastic frontier approach

Annageldy Arazmuradov (), Gianmaria Martini () and Davide Scotti

Economic Systems, 2014, vol. 38, issue 1, 115-135

Abstract: This paper investigates the process of GDP generation in former Soviet Union (FSU) economies to provide an understanding of the impact of technology channels on countries’ efficiency. We apply a stochastic frontier approach to 15 FSU economies over the period 1995–2008 and find that FDI and human capital improve countries’ technical efficiency. Furthermore, we show that these factors also have a positive impact on total factor productivity (TFP), which, in turn, improves real GDP growth. Hence, our results suggest that FSU countries should promote public policies that provide incentives to attract foreign investment and enhance domestic education in order to improve their economic growth. Additionally, our empirical evidence argues against the resource curse hypothesis. We also show, by computing efficiency change and technological change indices at the country level, that FSU economies benefit more from exploiting technological progress than from catching up to the best practice frontier.

Keywords: Eurasia; Former Soviet Union (FSU); Technology channels; Total factor productivity (TFP); Stochastic frontier analysis (search for similar items in EconPapers)
JEL-codes: O33 O47 O57 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Determinants of Total Factor Productivity in Former Soviet Union Economies: A Stochastic Frontier Approach (2011) Downloads
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DOI: 10.1016/j.ecosys.2013.07.007

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