Type of Document	Dissertation
Author	Roy, Subaran
Author's Email Address	sroy7@lsu.edu
URN	etd-08272008-000329
Title	Technology Diffusion and Total Factor Productivity Growth
Degree	Doctor of Philosophy (Ph.D.)
Department	Economics
Advisory Committee	Advisor Name Title Areendam Chanda Committee Chair Areendam Chanda Committee Chair Areendam Chanda Committee Chair Areendam Chanda Committee Chair W. Doug Douglas McMillin Committee Co-Chair Bulent Unel Committee Member Faik A. Koray Committee Member Jorge Morales Dean's Representative Jorge Morales Dean's Representative Jorge Morales Dean's Representative Jorge Morales Dean's Representative
Keywords	Technology Diffusion Total Factor Productivity Growth Foreign Direct Investment Capital Goods Imports Distance from Technology Frontier
Date of Defense	2008-07-31
Availability	unrestricted
Abstract I investigate the effects of two important channels of technology diffusion (i) Foreign Direct Investment (FDI) and (ii) import of capital goods, on the total factor productivity (TFP) growth. My first essay contributes to the literature by empirically investigating the role of initial distance of a country from the technology frontier in determining the net effect of FDI on TFP growth. In this essay, I find that the net effect of FDI on TFP growth decreases with the increase in distance. In order to take this research a step further, I implement the recently developed threshold regression technique to explore the non-linearity associated with FDI. I find that if initial distance of a country exceeds a threshold level then the leader will have a locomotive effect and can pull the followers along, while in the other situation there is a significant negative impact of FDI that increases with distance as a result of which the net benefit from FDI can be miniscule. My second essay examines how technological distance affects the impact of capital goods imports on TFP growth. Both, at the aggregate level, and the disaggregated level, I find that distance is a significant determinant of the net effect of capital goods import on TFP growth. Interestingly, this study shows that as distance increases, the benefit from capital goods import also increases. The result is robust to instrumental variable estimation technique which addresses the problem of endogeneity. Thus, the results of my first two essays indicate that the two modes of technology diffusion - FDI and capital imports - play dramatically different role on TFP growth depending upon the initial distance of a country from the frontier. Final essay examines effects of FDI in Indian States in the post reform (post 1991) era. Since the adoption of New Industrial Policy (NIP) and on going reform process, Foreign Direct Investment (FDI) inflows have increased substantially. Using recent data on FDI our results indicate higher human capital and financial assistance are essential ingredients to reap benefits from FDI for Indian states.
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