na 0005 nsa 0001 nsa 0001 0001 AR1 0556 0333 0636 0640 0540 0584 0369 0406 0951

Na 0005 nsa 0001 nsa 0001 0001 ar1 0556 0333 0636

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na 0.005 nsa 0.001 nsa -0.001 -0.001 AR(1) (0.556) (0.333) (0.636) (0.640) (0.540) (0.584) (0.369) (0.406) (0.951) (0.490) AR(2) (0.214) (0.191) (0.167) (0.172) (0.581) (0.081) (0.169) (0.078) (0.224) (0.127) Sargan OIR (0.511) (0.491) (0.637) (0.482) (0.710) (0.269) (0.552) (0.237) (0.359) (0.686) Hansen OIR (0.700) (0.395) (0.678) (0.514) (0.651) (0.169) (0.482) (0.491) (0.285) (0.288) DHT for instruments (a)Instruments in levels H excluding group (0.474) (0.474) (0.307) (0.241) (0.307) (0.551) (0.627) (0.293) (0.160) (0.856) Dif(null, H=exogenous) (0.658) (0.342) (0.737) (0.603) (0.707) (0.128) (0.382) (0.536) (0.396) (0.173) (b) IV (years, eq(diff)) H excluding group (0.546) (0.673) (0.419) (0.615) (0.399) (0.138) (0.401) (0.286) (0.225) (0.313) Dif(null, H=exogenous) (0.680) (0.120) (0.970) (0.274) (0.956) (0.354) (0.529) (0.868) (0.471) (0.294) Fisher 152.07*** 15542.43 *** 295.07*** 4475.85 *** 167.96 *** 1633.02 *** 672.82 *** 915.41 *** 1767.59 *** 2177.41 *** Instruments 18 22 22 22 22 18 22 22 22 22 Countries 24 24 24 24 24 24 24 24 24 24 Observations 93 81 91 83 91 93 81 91 83 91 ***,**,*: significance levels at 1%, 5% and 10% respectively. DHT: Difference in Hansen Test for Exogeneity of Instruments Subsets. Dif: Difference. OIR: Over-identifying Restrictions Test. The significance of bold values is twofold. 1) The significance of estimated coefficients and the Wald statistics. 2) The failure to reject the null hypotheses of: a) no autocorrelation in the AR(1) & AR(2) tests and; b) the validity of the instruments in the Sargan and Hansen OIR tests. Gov’t:Government. nsa: not specifically applicable because the estimated model is not valid. na: not applicable because at least one
16 estimated coefficient required for the computation of net effects is not significant. The mean value of imports is 40.422 while the mean value of exports is 28.459. Constants are included in all regressions. The following results are apparent from Tables 1-4. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth, welfare real TFP. In summary, the tested hypothesis is valid for the most part. Third, most of the significant control variables reflect the expected signs. Table 4: Welfare real TFP, FDI and Trade Dependent variable: Welfare Total Factor Productivity (Welfare real TFP) Trade Imports (Imports) Trade Exports (Exports) Welfare real TFP (-1) 0.597*** 0.524*** 0.562*** 0.617*** 0.668*** 0.589*** 0.457*** 0.568*** 0.625*** 0.611*** (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) FDI 0.014 0.010 0.020* 0.020** 0.023** 0.042*** 0.024*** 0.030*** 0.037*** 0.037*** (0.179) (0.107) (0.054) (0.026) (0.025) (0.000) (0.000) (0.000) (0.000) (0.000) Imports 0.002** 0.002** 0.001 0.003** 0.002*** --- --- --- --- --- (0.022) (0.028) (0.141) (0.016) (0.005) Exports --- --- --- --- --- 0.005*** 0.006*** 0.003*** 0.005*** 0.004*** (0.000) (0.000) (0.000) (0.000) (0.002) FDI× Imports -0.0003 -0.0002* -0.0004* -0.0004** -0.0004 ** --- --- --- --- --- (0.150) (0.097) (0.055) (0.030) (0.028) FDI× Exports --- --- --- --- --- -0.001 *** -0.0006 *** -0.0009 *** -0.001*** -0.001*** (0.000) (0.000) (0.000) (0.000) (0.001) Education --- -0.051 --- --- --- --- -0.274*** --- --- (0.593) (0.002) Gov’t Expenditure --- --- 0.006** --- --- --- --- 0.005*** --- --- (0.032) (0.001) Remittances --- --- --- -0.003 --- --- --- --- 0.0007** --- (0.119) (0.013) Private Credit --- --- --- --- -0.002*** --- --- --- --- -0.0008 (0.005) (0.231) Time Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Net Effects na na 0.003 na 0.006 0.013 0.006 0.004 0.008 0.008 AR(1) (0.015) (0.129) (0.020) (0.046) (0.021) (0.019) (0.047) (0.043) (0.027) (0.048) AR(2) (0.752) (0.403) (0.327) (0.700) (0.292) (0.513) (0.120) (0.333) (0.791) (0.789) Sargan OIR (0.265) (0.138) (0.244) (0.164) (0.325) (0.164) (0.743) (0.105) (0.282) (0.033) Hansen OIR (0.233) (0.311) (0.155) (0.538) (0.313) (0.375) (0.702) (0.302) (0.602) (0.256) DHT for instruments (a)Instruments in levels H excluding group (0.236) (0.241) (0.157) (0.105) (0.141) (0.074) (0.107) (0.075) (0.388) (0.261) Dif(null, H=exogenous) (0.248) (0.360) (0.216) (0.797) (0.458) (0.607) (0.932) (0.567) (0.604) (0.281) (b) IV (years, eq(diff)) H excluding group (0.385) (0.521) (0.354) (0.523) (0.463) (0.191) (0.678) (0.313) (0.651) (0.196) Dif(null, H=exogenous) (0.157) (0.134) (0.079) (0.426) (0.172) (0.753) (0.494) (0.319) (0.354) (0.473) Fisher 73.14*** 48585 *** 349.64 *** 338.17 *** 291.64 *** 8278.98 *** 75.68*** 14174.99 *** 321.88 *** 245.75 *** Instruments 18 22 22 22 22 18 22 22 22 22 Countries 24 24 24 24 24 24 24 24 24 24 Observations 93 81 91 83 91 93 81 91 83 91 ***,**,*: significance levels at 1%, 5% and 10% respectively. DHT: Difference in Hansen Test for Exogeneity of Instruments Subsets. Dif: Difference. OIR: Over-identifying Restrictions Test. The significance of bold values is twofold. 1)

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