The effects of openness, trade orientation, and human capital on total factor productivity

We study the effects of openness, trade orientation, and human capital on t otal factor productivity for a pooled sample of developed and developing co untries. Total factor productivity emerges from a parsimonious specificatio n of the aggregate production function. Potential determinants of total fac tor productivity include measures of openness, trade orientation, and human capital. Higher openness benefits total factor productivity. Outward-orien ted countries experience higher total factor productivity, over and above t he positive effect of openness. Human capital generally contributes positiv ely to total factor productivity. In poor countries, however, human capital interacts with openness to achieve a positive effect. (C) 2000 Elsevier Sc ience B.V. All rights reserved. JEL classification: F43; O47.