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Multinational Enterprises, Technology Diffusion, and Host Country Absorptive Capacity: A Note

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  • Khaled Elmawazini
  • Pran Manga
  • Samir Saadi

Abstract

Previous empirical studies show mixed support for the hypothesis that the impact of technology diffusion from multinational enterprises (MNEs) on host country productivity growth depends on host country absorptive capacity. One explanation is that the results of these empirical studies are sensitive to the measures of absorptive capacity used. This paper contributes to the empirical literature by investigating average years of schooling and total factor productivity gap as measures of host country absorptive capacity in 38 developed and developing countries. Panel data regression equations are estimated using a cross-sectionally heteroskedastic and timewise autoregressive (CHTA) model. The paper has two main results. The first result does not support the hypothesis that the technology diffusion from MNEs has a positive impact on the productivity growth in developing countries. The second result is that the total factor productivity gap is more appropriate than average years of schooling to measure host country absorptive capacity. This may suggest that the results of previous studies that used average years of schooling should be interpreted with caution.

Suggested Citation

  • Khaled Elmawazini & Pran Manga & Samir Saadi, 2008. "Multinational Enterprises, Technology Diffusion, and Host Country Absorptive Capacity: A Note," Global Economic Review, Taylor & Francis Journals, vol. 37(3), pages 379-386.
    • Handle: RePEc:taf:glecrv:v:37:y:2008:i:3:p:379-386
    DOI: 10.1080/12265080802273356
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    References listed on IDEAS

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    1. Lensink, R. & Morrissey, O., 2001. "Foreign direct investment: flows, volatility and growth in developing countries," Research Report 01E16, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Robert E. Hall & Charles I. Jones, "undated". "The Productivity of Nations," Working Papers 96012, Stanford University, Department of Economics.
    3. repec:dgr:rugsom:01e16 is not listed on IDEAS
    4. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    5. Blomstrom, Magnus & Kokko, Ari, 1997. "How foreign investment affects host countries," Policy Research Working Paper Series 1745, The World Bank.
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    Cited by:

    1. Khaled Elmawazini & Sonny Nwankwo, 2013. "Globalisation and Income Gap between Rich and Poor Nations," Economic Issues Journal Articles, Economic Issues, vol. 18(2), pages 19-40, September.
    2. Huynh, Linh & Hoang, Hien & Tran, Hung, 2020. "Does FDI enhance provincial productivity? A panel data analysis in Vietnam," MPRA Paper 117620, University Library of Munich, Germany, revised Aug 2021.
    3. Sam Hobbs & Dimitrios Paparas & Mostafa E. AboElsoud, 2021. "Does Foreign Direct Investment and Trade Promote Economic Growth? Evidence from Albania," Economies, MDPI, vol. 9(1), pages 1-19, January.
    4. Khaled Elmawazini & Elias G. Saleeby & Ahmed Ibn el Farouk & Bashayer AL-Naser, 2018. "Tripartite decomposition of labor productivity growth, FDI and human development: evidence from transition economies," Economic Change and Restructuring, Springer, vol. 51(2), pages 153-171, May.
    5. Khaled Elmawazini & Gamal Atallah & Sonny Nwankwo & Yazid Dissou, 2013. "US Foreign Affiliates, Technology Diffusion and Host Country Human Development: Human Development Index versus Human Capital," Industry and Innovation, Taylor & Francis Journals, vol. 20(1), pages 69-91, January.

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