International technology diffusion and economic growth: Explaining the spillover benefits to developing countries
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Technology spillovers offer great opportunities for economic growth to developing countries that do little, if any, R&D activity. This paper explores the extent to which these countries benefit from foreign technology, the diffusion mechanisms involved, the factors that shape their absorption capabilities, and the sources of heterogeneity in the spillover gains. Results based on a non-stationary panel of 47 developing countries and covering the period 1980-2006 first indicate that the gains in terms of increased aggregate productivity are quite substantial, and the import channel appears to be more conducive to knowledge spillover than the FDI channel. In addition, developing countries that enjoy larger benefits tend to have larger stock of human capital, more openness to international trade, as well as stronger institutions. Furthermore, the results do not provide a clear answer as of the type of R&D which is associated with more spillover benefits.