Author
Muhammad SHAFIQ-UR-REHMAN* and Mohammed NISHAT**
Abstract
FDI (Foreign Direct Investment) and international trade have been noticeable characteristics
of the world economy over the last few decades. The importance of trade and FDI has received
considerable attention from policymakers and academic researchers. Against this
backdrop, this study attempts to observe and compare the effect of FDI, imports and energy
on growth in Total Factor Productivity (TFP) on high and middle-income economies by
using two separate panel data sets from 1990 to 2019 by employing the Feasible Generalized
least square method. Results suggest that FDI in both high and middle-income economies
is positively and statistically significant and related to TFP. Moreover, the impact of imports
and energy in middle-income economies is statistically significant, and they affect TFP negatively
and positively, respectively. Results further manifest that in world economies, the
transfer of proprietorship to private foreign hands is linked with productivity gains; however,
imports are offsetting these gains in middle-income economies.
