Technical Efficiency and Total Factor Productivity of Asean Economies : How Do the Openness Factors Matter?

This dissertation investigates the impact of openness variables such as FDI and trade on countries’ productivity in ASEAN and on three other countries’ economies (China, South Korea, and Japan) through the efficiency improvement channel. It is the first study to distinguish the impact of trade activities between intra-regional and interregional trade on countries’ efficiency improvement in ASEAN. By employing data covering the period 2001-2018 with the time varying stochastic production frontier approach, this study found that the variables of FDI, human capital, inter-ASEAN export and intra-ASEAN import significantly affect ASEAN countries’ efficiency. In contrast, no statistically significant impact of intra-ASEAN export and inter-ASEAN import on ASEAN countries’ efficiency improvement was found. In addition, the study’s findings demonstrate that the interacting variable, such as the one of human capital and intra-ASEAN import, significantly promotes technical efficiency. This finding indicates that import activities, especially machinery and equipment tools focused on in this study, should be incorporated by the good quality of human capital to improve economy. The findings of this dissertation have important implications for policymakers in the host countries