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Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness

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  • Thanh Dinh Su
  • Canh Phuc Nguyen

Abstract

This study examines the catalytic role of trade openness in the relationships between human capital and public spending and total factor productivity (TFP) growth in 44 developing countries over the 1980–2014 period. Applying various estimation techniques to deal with autocorrelation, heteroscedasticity and cross-section dependence, the study finds that (a) the effect of human capital on TFP is nonlinear, (b) government consumption positively affects TFP but military spending is a negative factor and (c) trade openness significantly improves the positive influences of these factors on TFP. The results imply the important role of trade liberalisation in productivity evolution in developing countries. JEL Codes: F43, H52, O47

Suggested Citation

  • Thanh Dinh Su & Canh Phuc Nguyen, 2022. "Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness," Foreign Trade Review, , vol. 57(1), pages 66-84, February.
    • Handle: RePEc:sae:fortra:v:57:y:2022:i:1:p:66-84
    DOI: 10.1177/00157325211045471
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    More about this item

    Keywords

    Public spending; human capital; trade openness; total factor productivity; developing countries;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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