The Relationship between Foreign Direct Investment and Total Factor Productivity: The Case of Top 10 Oil Producing Countries

• Main Author: Najipour, Saman
• Other Authors: Fethi, Sami
• Format: Master Thesis
• Language: English
• Published: Eastern Mediterranean University EMU - Doğu Akdeniz Üniversitesi (DAÜ) 2017
• Subjects: Business Administration; Investments; Foreign-Cameroon; Foreign Direct Investment; Total Factor Productivity; Labor Quality Index; Oil-producing countries; Panel Unit Root Test; Co-integration Test; Panel Error Correction Model; Hatta; sami
• Online Access: http://hdl.handle.net/11129/4262

So many years countries, which were not in a good economic situation attempted to attract foreigner to invest and do business in their countries. The evidences show that this strategy would have a positive affect on Economic Growth as well as Total Factor Productivity of the host countries. This thesis examines the relationship between Foreign Direct Investment and Total Factor Productivity in short-term and long-term period between years 2011 and 2015 by using panel data analysis with the world’s top ten oil-producing courtiers as a sample. First Panel Unit Root Test is conducted to find whether variables are stationary or not. Then the Co-integration and panel error correction modeling tests are conducted to detect possible relationships between variables. Results suggest that in long-term period, Foreign Direct Investment affects Total Factor productivity of these countries in a positive way while in short-term period there is no affect. On the other hand Labor Quality Index doesn’t have any influence on TFP in both long-term and short-term period. Moreover, TFP merges to its long-term path significantly through its determinants, whereas it converges to their own equilibrium level. Keywords: Foreign Direct Investment, Total Factor Productivity, Labor Quality Index, Oil-producing countries, Panel Unit Root Test, Co-integration Test, Panel Error Correction Model ÖZ: Uzun zamandan beri ülkeler ekonomik olarak zorluk çekmektedir. İlgili ülkelerdeki ekonomik kalkınma için dogrudan yabancı sermayeyi ve iş dünyasını kendi ülkelerine çekmeye çalışırlar. Bu tez dogrudan yabancı sermaye, toplam faktör verimliliği ve emek arasındaki ilişkiyi uzun ve kısa dönem olarak belirlemek için 2011 ve 2015 yıllarını kullanarak ölçmeye çalışır. Bu çalışmada, Panel eşbütünleme, hatta düzeltme modeli ve panel birim kök teknikleri en fazla petrol üreten 10 ülkeye uygulanmıştır. Ampirik sonuçlar doğrudan yatırım ve toplam faktör verimliliği arasında uzun süreli pozitif bir ilişki göstermektedir. Ayrıca, sonuçlar Emek’in büyümesi toplam faktör verimliliği üzerinde ne kısa nede uzun dönem etkisi olmuştur. Buna ilaveten, toplam faktör verimliliği uzun dönemde kendi dengesine yakınnaştığı tespit edilmiştir. Anahtar Kelimeler: Dogrudan yabancı yatırım, Toplam faktör verimliliği, Emek, petrol üreten ülkeler, Refah, Panel Eşbütünleme testi, Panel Birim Kök Testi, Panel hatta düzeltme testi Master of Business Administration. Thesis (M.B.A.)--Eastern Mediterranean University, Faculty of Business and Economics, Dept. of Business Administration, 2017. Supervisor: Prof. Dr. Sami Fethi.