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The Relationship Between Labor Productivity, Exports, and Foreign Direct Investment for Transition Economies

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  • Mehmet Akyol

    (Gumushane Universitesi, Iktisadi ve Idari Bilimler Fakultesi Iktisat Bolumu, Gumushane-Turkiye)

  • Emrullah Mete

    (Giresun Universitesi, Gorele Uygulamali Bilimler Yuksekokulu Lojistik Yonetimi Bolumu, Giresun-Turkiye)

Abstract

Due to the scarcity of global resources and the fact that technological developments do not occur in every country, productivity has become an important instrument of economic development for many countries. It is generally accepted that an increase in labor productivity stimulates a country’s macroeconomic performance in terms of its exports, foreign direct investment (FDI), and economic growth. In this study, we examine the relationship between labor productivity, exports, and FDI for transition economies over the period from 2005 to 2019, using a Dumitrescu–Hurlin panel causality analysis. The study’s findings indicate that while a causal relationship between labor productivity and exports cannot be determined, there is one-way causality from labor productivity to FDI. The results of the analysis suggest that labor productivity is the cause of increased FDI in these countries.

Suggested Citation

  • Mehmet Akyol & Emrullah Mete, 2021. "The Relationship Between Labor Productivity, Exports, and Foreign Direct Investment for Transition Economies," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 8(2), pages 155-171, July.
    • Handle: RePEc:ist:iujepr:v:8:y:2021:i:2:p:155-171
    DOI: 10.26650/JEPR.897968
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor productivity; Foreign direct investments; Export; Economic growth; Panel causality analysis JEL Classification : E24 ; J24 ; O11;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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