The Effectiveness of Export, FDI and R&D on Total Factor Productivity Growth : The Cases of Taiwan and Korea

The objective of this study is to examine the relationship between total factor productivity (TFP) growth and other variables such as openness to trade, FDI and R&D using segregated manufacturing industries data from Taiwan and Korea. The extreme bound analysis (EBA) is employed to investigate the robustness of the variables. Our empirical findings do not support the common belief of a positive and significant relationship between openness to trade and TFP growth. In addition, neither growth of FDI nor R&D shows a positive effect on TFP growth. However, our empirical results indicate that output growth has a robust and positive relationship with TFP growth for both countries