Endogenizing Total Factor Productivity: The Foreign Direct Investment channel in the case of Bulgaria (2004-2013)

Milena Pesheva and Aleksandar Vasilev

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper estimates the contribution of Foreign Direct Investment (FDI) to the Total Factor Productivity (TFP) of Bulgaria for the period 2004-2013. Since TFP captures the joint efficiency of capital and labor, it is likely to be influenced by investments from abroad. As predicted by theory, a positive relationship between TFP and FDI is documented. The effect of ignoring the implications of this model on the economy is explored through simulations and it is proven that this action leads to a distorted view of the growth path of the economy. The standard Ramsey (optimal) growth model, augmented with the FDI channel is used to compare the speed of convergence to an identical setup without FDI. The results of the study can serve as justification for introduction of policies and development of governmental strategies for attracting FDI inflows.

Keywords: TFP; FDI (search for similar items in EconPapers)
JEL-codes: E13 E22 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cmp, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/144163/1/anonymized_pdf.pdf (application/pdf)

Related works:
Journal Article: Endogenising Total Factor Productivity: The Foreign Direct Investment Channel in the Case of Bulgaria (2004-2013) (2017)
Journal Article: Endogenizing Total Factor Productivity: The Foreign Direct Investment channel in the case of Bulgaria (2004-2013) (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:144163

Access Statistics for this paper

More papers in EconStor Preprints from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().