Abstract

RAMIREZ, Miguel D.. Foreign Capital and Labor Productivity Growth in Chile: An Empirical Analysis. Prob. Des [online]. 2005, vol.36, n.140, pp.43-61. ISSN 0301-7036.

This paper examines the impact of foreign direct investment (FDI) on labor productivity growth in Chile during the 1960-2001 period. Using co-integration analysis, the paper estimates an error correction model (ECM) that suggests that increases in FDI flows had a positive and significant effect on labor productivity growth. The lagged public investment variable, as well as outward-oriented policies and economic crises (captured by dummies) were also found to have the expected sign and to be statistically significant. The error correction terms are negative and statistically significant, suggesting that contemporaneous shocks to the long-run labor productivity relationship are corrected in subsequent periods.

Keywords : error correction model (ECM); akaike information criterion (AIC); Schwartz bayesian criterion (SBC).

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