The Study of the relationship between Exchange Rates and the Total Factor Productivity (TFP) Growth: An Empirical Analysis Based On Panel Data in Selected Countries

Productivity is one the important concepts and fundamental necessity for the economic growth and development of all countries of the world. Hence, the study and identification of variables and factors influencing it, is essential especially for appropriate policymaking. The main objective of this study can be served as an investigation of the effect of exchange rate fluctuations on the TFP growth and to achieve this, the third class of endogenous growth theories have been considered in order to design hypotheses and model.To test hypotheses, the panel data methodology is employed for the period of 2000 to 2009 and the specified model is estimated for 7 selected countries of APO members including I.R Of Iran in deferent approaches and in order to determine the presence and type of effects, the Leamer and Hauseman tests are carried out.The results of estimations confirm our two hypotheses and statistically indicate that the significant relation between exchange rate fluctuations and TFP growth cannot be rejected so that the TFP growth will decline if the exchange rate increases and vice versa. Furthermore, the study has several consequences which are concerned with the effects of other variables on the TFP growth, such as the degree of openness to foreign trade and inflationary circumstances. Policy recommendations have been discussed in the terminal sector of paper.