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The role of foreign capital in domestic manufacturing productivity: empirical evidence from Asian economies

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  • Rubiana Chamarbagwala
  • Sunder Ramaswamy
  • Phanindra Wunnava

Abstract

The paper empirically examines the relative contribution of foreign and domestic machinery and equipment on manufacturing productivity in seven Asian economies. A Cobb-Douglas production function is used to test whether foreign machinery is more productive than domestic machinery. The study is based on a pooled cross-sectional time-series model, including seven countries - Hong Kong, Singapore, South Korea, Malaysia, Indonesia, the Philippines and India - for the years 1975 to 1990. The results support the hypothesis that a country's stage of development, skill-level of its labour force, and the technology embodied in capital play a crucial role in determining the relative impact of foreign and domestic capital on manufacturing productivity.

Suggested Citation

  • Rubiana Chamarbagwala & Sunder Ramaswamy & Phanindra Wunnava, 2000. "The role of foreign capital in domestic manufacturing productivity: empirical evidence from Asian economies," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 393-398.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:4:p:393-398
    DOI: 10.1080/000368400322561
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