EAJESEurasian Journal of Economics and Statistics
Peer Reviewed Journal
Peer Reviewed Journal
Long-run Estimates of Openness of Trade and Total Factor Productivity for India and Iran A Comparative Study using the ARDL Bounds Approach
The present study empirically investigates the long-run and short-run impact of trade openness (percent of GDP) and urbanization on total factor productivity, including industrialization in a multivariate framework. For this purpose, we have employed the Autoregressive Distributed Lagged Model (ARDL) for the period of 1960 to 2023 for India and Iran. The study from the ARDL bounds approaches exposes a strong correlation among the variables under investigation in both countries. Long-run parameter of trade openness is positive and statistically significant, suggest that this variable have important implication in the framing of productivity enhancement for both countries. The total factor productivity attributes to the technological progress taking place in a country. The TFP in Iran is reinforced by the positive interaction between human capital and trade policy. The policy to synchronize urbanization and industrial infrastructure spread should be taken into consideration. In the Indian context, the low-quality human capital dampens TFP as it couldn’t much effectively synergize with pro-trade policies. Further, industrialization is missing the urbanization of India, which should be tackled.
Keywords: TFP, Openness of trade, Urbanization, Industrialization, ARDL, Cointegration.
JEL classifications: D24, F14, F40.
Sanjay Kumar (2025). Long-run Estimates of Openness of Trade and Total Factor Productivity for India and Iran. A Comparative Study using the ARDL Bounds Approach. Eurasian Journal of Economics and Statistics, 2: 2, pp. 59-72.
