EFFICIENCY, PRODUCTIVITY, AND OPENNESS: EMPIRICAL EVIDENCE FROM ASEAN PLUS THREE ECONOMIES

Abstract

This paper investigates the impact of openness variables, i.e., Foreign Direct Investment (FDI), exports, and imports, on productivity and efficiency. By employing annual data from the 13 countries from 2001 to 2018, this study confirms that openness variables affect countries' productivity and efficiency. Productivity will improve when FDI interacts with human capital and intra- and inter-region exports, as well as when inter-region imports interact with human capital. Meanwhile, efficiency will enhance along with the enhancement of FDI, human capital, and intra-region imports. This study emphasises the importance of minimising underutilised capital and optimising production cost and managerial expertise.