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


  • Rubiana Chamarbagwala
  • Sunder Ramaswamy
  • Phanindra Wunnava


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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    References listed on IDEAS

    1. Toda, Yasushi, 1979. "Technology transfer to the USSR: The marginal-productivity differential and the elasticity of intra-capital substitution in Soviet industry," Journal of Comparative Economics, Elsevier, vol. 3(2), pages 181-194, June.
    2. Terrell, Katherine, 1992. "Productivity of western and domestic capital in polish industry," Journal of Comparative Economics, Elsevier, vol. 16(3), pages 494-514, September.
    3. Weitzman, Martin L., 1979. "Technology transfer to the USSR: An econometric analysis," Journal of Comparative Economics, Elsevier, vol. 3(2), pages 167-177, June.
    4. Dodaro, Santo, 1991. "Comparative advantage, trade and growth: Export-Led growth revisited," World Development, Elsevier, vol. 19(9), pages 1153-1165, September.
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    Cited by:

    1. Heru Margono & Subhash Sharma & Kevin Sylwester & Usama Al-Qalawi, 2009. "Technical efficiency and productivity analysis in Indonesian provincial economies," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 663-672.
    2. Goss, Ernie & Wingender Jr., John R. & Torau, Megan, 2007. "The contribution of foreign capital to U.S. productivity growth," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(3), pages 383-396, July.
    3. Shimaa Elkomy & Hilary Ingham & Robert Read, 2015. "Economic, Institutional & Political Determinants of FDI Growth Effects in Emerging & Developing Countries," Working Papers 95922154, Lancaster University Management School, Economics Department.
    4. Chia-I Pan & Tsangyao Chang & Yemane Wolde-Rufael, 2015. "Military Spending and Economic Growth in the Middle East Countries: Bootstrap Panel Causality Test," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(4), pages 443-456, August.
    5. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data," Resource and Energy Economics, Elsevier, vol. 30(1), pages 50-65, January.

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