International Trade, Foreign Direct Investment (FDI) and International Technology Transfer: A Comparative Study of Asian and African Economies

This paper investigates the long-run equilibrium relationships and short-term effect of international trade and Foreign Direct Investment (FDI) on international technology transfers in selected African and Asian countries from 1980 to 2013.The Johansen and Juselius multivariate co-integration technique and the granger causality test was used to test these relationships. The findings confirmed the presence of co-integrating vectors in the models of these countries. The outcome of the test posits short-run causal relationships, which run either bidirectionally or unidirectionally in all the variables for the selected countries. However, the most interesting lesson for many developing countries in Africa and Asia is that this study confirmed that international technology transfers supported domestic investment, economic growth, exports and imports of goods and services in some of these countries. Finally, all the variables in each model adjusted to equilibrium in the long-run, except for domestic investment in the Malaysian, Nigerian and Indian systems. The study thereby suggests an improved government policies and regulatory framework to improve international technology transfers, domestic investment, economic growth, and exports and imports of goods and services.Keywords: International Technology Transfer, Foreign Direct Investment, Trade, Vector Error Correction Modeling, Africa, Asia