Productive Contribution of Public Spending and Human Capital in Developing Countries Revisited: The Role of Trade Openness. Issue 1 (February 2022)

• Record Type: Journal Article
• Authors: Su, Thanh Dinh; Nguyen, Canh Phuc
• Is Part Of: Foreign trade review. Volume 57:Issue 1(2022)
• Page Start: 66
• Page End: 84
• Publication Date: 2022-02
• Subjects: Public spending -- human capital -- trade openness -- total factor productivity -- developing countries; 382.0954005
• DOI: 10.1177/00157325211045471
• Languages: English
• ISSNs: 0015-7325

Abstract

This study examines the catalytic role of trade openness in the relationships between human capital and public spending and total factor productivity (TFP) growth in 44 developing countries over the 1980–2014 period. Applying various estimation techniques to deal with autocorrelation, heteroscedasticity and cross-section dependence, the study finds that (a) the effect of human capital on TFP is nonlinear, (b) government consumption positively affects TFP but military spending is a negative factor and (c) trade openness significantly improves the positive influences of these factors on TFP. The results imply the important role of trade liberalisation in productivity evolution in developing countries. JEL Codes: F43, H52, O47