Abstract

• This study investigates the effect of inward foreign direct investment, and trade on economic growth in Myanmar over the period 1996-2022 including the covid-19 pandemic period. The study applied both long- and short-run effects of inward FDI and trade on labor productivity using Autoregressive Distributed Lag (ARDL) bound test and Error Correction (EC) model. To account for other labor productivity determinants, economic freedom index, inflation, and covid-19 dummy variables have been used. The empirical results imply that foreign direct investment impact is ambiguous in the short run, but it is beneficial in the long run. Capital goods import has a positive and statistically significant short run and long run impact on labor productivity in Myanmar. As expected, covid-19 pandemic negatively impacted the labor productivity in Myanmar. In this intuition, the GoM should emphasize more and attract skill intensive inward FDI and capital goods import which improve the labor productivity.