Accounting Total Factor Productivity of FDI Firm in Nepal

Raghu Bir Bista

Abstract


Economic Reforms towards economic liberalization and privatization is a good prescription to attract FDI in productive sectors. In 1990, Nepal liberalized her economy to create investment environment and destination of FDI by minimizing structural and institutional barriers and constraints for promoting TFP of productive sectors. This study investigates empirically what is TFP growth of FDI in Nepal in 1990 after economic liberalization process. We use econometric model based on Cobb Douglas production function and theoretical model of TFP growth accounting method. The econometric and non-parametric TFP estimation provides mostly positive TFP growth of FDI firms in Nepal. Few cases were influenced by political and security disturbances. Almost positive TFP growths have increasing productivity but there are still lower than expectation. There are still problems of massive inferior labor, no significant technological and financial transfer and poor business environment. Issues of continuity and stability between two periods indicate unpredictable situation of productivity.

Keywords


FDI, TFP growth, Economic Reform, Liberalization etc.

Full Text:

PDF

References


Alluwalia I.J. Productivity and Growth in Indian Manufacturing. Delhi: Oxford University press 1991.

Bala Krishnan P, Pushpangadam K. Total Factor Productivity Growth in Manufacturing Industry: A Fresh Look. Economics and Political Weekly 1994; 29(31): 2028-35.

Balasubramanyam V.N., Salisu M., Spasford D. Foreign direct investment and economic growth in EP an IS countries. Economic journal 1996; 106(1): 92-105

Bista R.B. FDI in Nepal: Regression Analysis in aspect of GDP growth and export. Economic Journal of Development Issues 2004; 5(2).

Bista R.B. Foreign Direct Investment in Nepal. Kathmandu: Center for Integrated Development Studies 2005.

Bista R.B. Liberalization and Productivity Growth in Nepal: A case of FDI firm. 2005. Retrieved from https://www.iioa.org/.../18th/.../90_20091229030_ ProductivitGrowthofFDIfirm.pdf

Chakrabati A. Determinants of FDI: A Comment on Globalization. Induced Changesand the Role of FDI policies. USA: University of Wisconsion 2003.

Dahal, Madan Kumar, Govinda Nepal and Shankar Aryal.2005.A Study of the Impact of Foreign Direct Investment Policy of Rich Countries on Poverty Reduction of Developing Countries: A Case Study of Manufacturing Sector in Nepal.Pakistan:SANEI

De Mello L. Foreign Direct Investment Led Growth: Evidence from Time-Series and Panel Data. Oxford Economic Papers 1999; 51: 133-151. 10. Golder B. TFP Growth in Indian Manufacturing in 1980s. Economic and Political Weekly 2002; 37(49): 4966-68.

Hymer S.H. The International Cooperation of National Firms: A study of Direct ForeignInvestment.Cambridge: MIT Monographs in Economics 1976.

His Majesty of Government (HMG).1993.Foreign Direct Investment and Technology Transfer Policy 1992. Kathmandu: Ministry of Industry. 13. Majagaiy K.P. A time series analysis of Foreign Direct Investment and Economic Growth: case study of Nepal. Investment Policy Review, Nepal, United Nations Conference on Trade and Development, New York and Geneva, 2003.

Ministry of Finance (MoF).1995.Economic Survey. Kathmandu: MoF. 15. Mishra AK. Assessment of Human Resource Capacity of Construction Companies in Nepal. J Adv Res Jour Mass Comm 2018; 5(4): 14-25

Ministry of Industry(MoI). 1993. Industrial Policy. Kathmandu: MoI. 17. National Planning Commission (NPC).1992.Eighth Five Years Plan.Kathmandu: National Planning Commission.

National Planning Commission (NPC).1997.Ninth Five Years Plan.Kathmandu: National Planning Commission.

Nunnenkamp P. Determinants of FDI in Developing Countries: Has Globalization Changed the Rule of Games?” Kiel Working Paper No 2002: 112. Germany: Kiel Institute forWorld Economy.

Poudyal S.R. Foreign Trade, Aid and Development in Nepal. New Delhi: Commonwealth Publications 1987.

Rana M, Pradhan S. 2005. Implementation Evaluation of Foreign Direct Investment in Nepal. Policy paper 1. Kathmandu: ADB and Economic Policy Network.

Rao J.M. Manufacturing Productivity Growth: Method and Measurement. Economic and Political weekly. 1996; 44: 2827-36

Regmi UR. Sources of Economic Growth in Nepal. The Economic Journal of Nepal. Kirtipur:CEDECON, Tribhuvan University 2004.

Trivedi P, Prakash A, Sinate D. Productivity in Major Manufacturing Industries in India: 1973-74 to 199798, Development Research Group Study no-20.Mubai: Department of Economic Analysis and Policy, Reserve Bank of India 2000.


Refbacks

Comments on this article

View all comments