Title Page
ABBREVIATIONS
Contents
Chapter 1. Introduction 11
1. Motives 11
2. Research questions 13
3. Gaps in the literature 14
4. Thesis composition 16
References 19
Chapter 2. FDI policy and economic performance of South Asia 22
1. FDI policy and performance of South Asia 22
1.1. FDI and trade policy changes 22
1.2. Trade and FDI performance 25
2. FDI and growth of South Asian countries 30
2.1. India 30
2.2. Bangladesh 33
2.3. Pakistan 38
2.4. Sri Lanka 42
2.5. Nepal 44
3. Current macroeconomic situation 46
4. Conclusion 51
References 54
Chapter 3. Impact of FDI on wage differential in Bangladesh 58
1. Introduction 58
2. Literature review 60
3. Characteristics of domestic and foreign firms in Bangladesh 63
4. Data description, summary statistics and estimation methods 66
4.1. Data description 66
4.2. Summary statistics 69
4.3. Estimation methodology 72
5. Estimation result 74
5.1. Baseline OLS estimation result 74
5.2. OLS estimation result with diverse interactions and ownership 77
5.3. Robustness check with quantile regression 80
6. Conclusion 81
References 83
Chapter 4. FDI and productivity growth: Experience of South Asia 86
1. Introduction 86
2. Literature review 88
3. Productivity measurement and sources of productivity 91
3.1. Malmquist productivity index 91
3.2. Sources of productivity 94
4. Description of data and estimation methods 105
4.1. Description of data 105
4.2. Estimation methodology 109
5. Estimation results 111
6. Conclusion 125
References 127
Chapter 5. Conclusion 135
ABSTRACT 138
한글 초록 141
Table 2.1. FDI related characteristics of South Asian countries 53
Table 3.1. Data measurement 68
Table 3.2. Basic statistics of foreign and domestic firms 70
Table 3.3. Technology and innovation policy 71
Table 3.4. Average firm wage by industry and export characteristics 71
Table 3.5. OLS estimation result with human capital characteristics 75
Table 3.6. OLS estimation result with worker and firm characteristics 76
Table 3.7. OLS estimation result with human capital interaction terms 78
Table 3.8. OLS estimation result by different ownership 79
Table 3.9. Quantile regression result 81
Table 4.1. Yearly position of TFPC, EC and TC in South Asian countries 95
Table 4.2. Measurement of variables and sources of data 107
Table 4.3. Descriptive statistics 108
Table 4.4. Pooled OLS result 112
Table 4.5. Fixed Effect and Least Square Dummy Variable result 116
Table 4.6. Instrumental Variable result 117
Table 4.7. Prais-Winsten (PW) regression with PCSE result 123
Figure 2.1. Trend of trade worldwide 26
Figure 2.2. FDI inflows in different groups of countries 27
Figure 2.3. FDI of South Asia in absolute value and as percentage of GDP 28
Figure 2.4. FDI inflows of South Asian countries 29
Figure 2.5. Trend of FDI and GDP growth rate in India 30
Figure 2.6. Trend of export and import in India 31
Figure 2.7. Trend of FDI and GDP growth rate in Bangladesh 34
Figure 2.9. Trend of FDI and GDP growth rate in Pakistan 39
Figure 2.10. Trend of export and import in Pakistan 39
Figure 2.11. Trend of FDI and GDP growth rate in Sri Lanka 43
Figure 2.12. Trend of export and import in Sri Lanka 43
Figure 2.13. Trend of FDI and GDP growth rate in Nepal 45
Figure 2.14. Trend of export and import in Nepal 45
Figure 3.1. Regional distribution of firms in Bangladesh 64
Figure 3.2. Average wage of firms in Bangladesh 65
Figure 4.1. Frontier technology lines and efficiency measurement 91
Figure 4.2. TFPC of five South Asian countries 96
Figure 4.3. Trend of TFPC in India 97
Figure 4.4. Trend of TFPC in Bangladesh 99
Figure 4.5. Trend of TFPC in Pakistan 101
Figure 4.6. Trend of TFPC in Sri Lanka 103
Figure 4.7. Trend of TFPC in Nepal 104