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International Technology Diffusion and the Growth of TFP in the Manufacturing Sector of Developing Economies

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  • Andreas Savvides
  • Marios Zachariadis

Abstract

This paper evaluates various channels through which foreign technology diffuses to the manufacturing sector of developing economies. These economies undertake virtually no own R&D, so they rely on foreign technology to a much larger extent than developed economies. We investigate the direct effect of foreign R&D, as well as technology embodied in imports of intermediate and capital goods and foreign direct investment, on the growth of total factor productivity and value added in the manufacturing sector of 32 economies during 1965-92. We find that foreign R&D typically has the biggest positive impact on domestic productivity and value-added growth. Imports of capital goods and foreign direct investment also play a similar role, but their effect is of smaller magnitude and is not always significant. Copyright Blackwell Publishing Ltd 2005.

Suggested Citation

  • Andreas Savvides & Marios Zachariadis, 2005. "International Technology Diffusion and the Growth of TFP in the Manufacturing Sector of Developing Economies," Review of Development Economics, Wiley Blackwell, vol. 9(4), pages 482-501, November.
  • Handle: RePEc:bla:rdevec:v:9:y:2005:i:4:p:482-501
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    References listed on IDEAS

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    1. Jörg MAYER, 2001. "Technology Diffusion, Human Capital And Economic Growth In Developing Countries," UNCTAD Discussion Papers 154, United Nations Conference on Trade and Development.
    2. Jorge Crespo & Carmela Martin & Francisco Javier Velázquez, 2002. "International technology diffusion through imports and its impact on economic growth," European Economy Group Working Papers 12, European Economy Group.
    3. Frank R. Lichtenberg, 1992. "R&D Investment and International Productivity Differences," NBER Working Papers 4161, National Bureau of Economic Research, Inc.
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