The Role of Factors Influencing Total Factor Productivity in East and West Asia with Emphasis on Human Capital and Oil Rents

The purpose of this study is to investigate the factors affecting TFP in the East and West Asia in order to discover the reasons for the difference in total productivity in each of these regions. For this purpose, factors affecting TFP, especially human capital and oil rents, were investigated using several static and dynamic models and forming two distinct groups from East and West Asia. The results of the static models show that human capital, oil rents, trade openness and energy intensity are the most important reasons for the difference in total factor productivity in East and West Asian countries. Human capital and oil rents in West Asia have led to a decline in TFP, while human capital in East Asia has led to an increase in TFP. The degree of trade openness and energy intensity in West Asia are also important contributors to TFP growth while in the East Asia they are among the deterrents. Also, based on the results of dynamic models, total factor productivity in the past period has had the greatest role in total factor productivity in the current period for West and East Asian countries.