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| Lumengo Bonga-bonga and Maphelane Phume |
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| ''Assessing the relationship between total factor productivity and foreign direct investment in an economy with a skills shortage: the case of South Africa'' |
| ( 2018, Vol. 38 No.3 ) |
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| This paper assesses the relationship between total factor productivity (TFP) and foreign direct investment (FDI) in a country with skills shortage. South Africa is used as a case study. Literature is inconclusive on how FDI should affect TFP. This paper shows that it is important to account for the interactivity between FDI and human capital when assessing the effects of FDI on TFP. Moreover, the empirical results show that, contrary to countries with abundance of skills, in countries with skills shortage, it is in fact the change in stock of human capital - or human capital accumulation – that matters in determining the effects of FDI on TFP. |
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| Keywords: Total factor productivity, foreign direct investment, human capital |
JEL: O4 - Economic Growth and Aggregate Productivity: General
C1 - Econometric and Statistical Methods: General |
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| Manuscript Received : Dec 13 2017 | | Manuscript Accepted : Jul 18 2018 |
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