No. 564 - Technology transfer and economic growth in developing countries: an econometric analysis

In this paper we investigate two potential channels of international technology transfer towards developing countries: trade and foreign direct investments. We study the extent to which, through these channels, research and development expenditures (R&D) performed by advanced countries affect total factor productivity (TFP) levels in a panel of 45 developing countries over the period 1980-2000. Paying particular attention to the potential spillovers effects stemming from human capital, we estimate a TFP equation using the FMOLS technique. Our findings show that both channels induce substantial technology transfer across countries. In addition each developing country, for a given amount of foreign R&D, enjoys bigger spillovers the higher its educational level.