Openness and Productivity: The Role of Imports, FDI and International Telecommunications

Previous research has shown that trade and FDI are beneficial to countries’ economic development. This paper builds on the literature, and analyzes the effects on total factor productivity (TFP) through three channels of openness—imports, inward FDI and international call traffic (ICT) for a set of developing countries in Asia and Latin America and the Caribbean (LAC). Using data from the period of 1980 to 2000, I find that imports, FDI and international call traffic all significantly promote TFP growth in developing countries, and that human capital enhances the effects of imports on TFP.