Abstract
The paper investigates the impact of foreign ownership on total factor productivity (TFP) for Food and Tobacco and Financial Business sectors of Pakistan. Theoretical framework of Caves (1974) is estimated to examine firm?s productivity from foreign investment. Cobb-Douglas production function is estimated for each sector and then TFP is extracted from this function. Extracted TFP is regressed on set of variables including ownership dummies, foreign presence at sector level and firm size by using Random Effects model. The study concludes that foreign ownership has positive effect on TFP of both the sectors. However, the evidence for the impact of foreign presence at sector level is mixed. Firm size negatively affects TFP. The study recommends the provision of fiscal incentives to encourage research and development expenditures, rationalizing of labour laws and lower corporate tax rates to encourage joint ventures among foreign and domestic firm.
Article Details
- Year: 2009
- Volume: 30
- Issue: 2
- Pages: 27 - 58
- Accepted: 01.03.2009
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DOI:
https://doi.org/10.5281/zenodo.20826817 -
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How to Cite?
Husna Batool, Haleema Sadia, Eatzaz Ahmad (2009). Impact of Foreign Ownership on Total Factor Productivity: Evidence from Food and Tobacco and Financial Business Sectors of Pakistan. Journal of Economic Cooperation and Development, 30(2), 27-58. https://doi.org/10.5281/zenodo.20826817
