The Role of Foreign Direct Investment and Imports of Capital Goods in the North-South Diffusion of Technology

Technology diffusion across industrial countries has been the subject of considerable research. During the last decade economists have measured extensively the extent to which productivity gains are transmitted across countries in the North. However, research on technology diffusion to developing countries has been relatively scarce. This is surprising considering the importance that this source of productivity represents for countries in the South. This paper seeks to fill this gap. The results underline the importance of North-South schemes of integration for technology transfers as long as they lead to larger flows of FDI and trade from developed to developing countries.