Trade Diversification and TFP Growth In Emerging Market Economies

Vaseem, Akram and Rath, Badri Narayan (2016) Trade Diversification and TFP Growth In Emerging Market Economies. Masters thesis, Indian Institute of Technology Hyderabad.

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Abstract

The relationship between export div ersification and economic growth is well recognized and received much attention in the literature. The theoretical and empirical studies although substantially advanced in this area but still there is ambiguity on the relationship between trade diversifica tion and TFP growth. Most of the literature focused only on the relationship between export diversification and economic growth, not on the relationship between the trade diversification and TFP growth. The TFP growth is one of the best indicator s measuri ng the economic performance. The re is plenty of literature which provide the evidence in favor of export diversification and economic growth but failed to provide the evidence in favor of export diversification to TFP growth. By addressing the above mentioned issue , the present study examines the relationship between trade diversification and TFP growth in case of emerging market economies (EMEs) by using the dynamic panel model. The results indicate a positive relation between export diversification and TFP growth which eventually leads to the output growth. Moreover, we find that import diversification is also positively contributing towards the TFP growth in EMEs.

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