What role does trade play in international technology transfer? Do technologies introduced by multinational firms diffuse to local firms? What kinds of policies have proved successful in encouraging technology absorption from abroad and why? Using these questions as motivation, this article surveys the recent trade literature on international technology transfer, paying particular attention to the role of foreign direct investment. The literature argues that trade necessarily encourages growth only if knowledge spillovers are international in scope. Empirical evidence on the scope of knowledge spillovers (national versus international) is ambiguous. Several recent empirical plant-level studies have questioned earlier studies that argued that foreign direct investment has a positive impact on the productivity of local firms. Yet at the aggregate level, evidence supports the view that foreign direct investment has a positive effect on economic growth in the host country.Economic growth results from accumulation of factors of production or from improvements in technology or both. To encourage the generation of new knowledge, industrial countries have elaborate systems of intellectual property rights (iprs) in place and conduct the majority of the world's research and development (r&d). Technologies resulting from r&d spread throughout the world via a multitude of channels. On a fundamental level, international trade in technology differs from other indirect channels of international technology transfer, such as trade in goods and international movement of factors of production. This article critically surveys the literature that explores the roles of trade and foreign direct investment (fdi) as channels of international technology transfer. With respect to fdi, a distinction is made between wholly owned subsidiaries of multinational firms and international joint ventures. Furthermore, the role of fdi is contrasted with that of arm's-length channels of technology transfer, such as licensing.Although the literature has done a decent job of outlining the various channels through which international technology transfer occurs, not enough is known, both

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What role does trade play in international technology transfer? Do technologies introduced by multinational firms diffuse to local firms? What kinds of policies have proved successful in encouraging technology absorption from abroad and why? Using these questions as motivation, this article surveys the recent trade literature on international technology transfer, paying particular attention to the role of foreign direct investment. The literature argues that trade necessarily encourages growth only if knowledge spillovers are international in scope. Empirical evidence on the scope of knowledge spillovers (national versus international) is ambiguous. Several recent empirical plant-level studies have questioned earlier studies that argued that foreign direct investment has a positive impact on the productivity of local firms. Yet at the aggregate level, evidence supports the view that foreign direct investment has a positive effect on economic growth in the host country. Economic growth results from accumulation of factors of production or from improvements in technology or both. To encourage the generation of new knowledge, industrial countries have elaborate systems of intellectual property rights (iprs) in place and conduct the majority of the world's research and development (r&d). Technologies resulting from r&d spread throughout the world via a multitude of channels. On a fundamental level, international trade in technology differs from other indirect channels of international technology transfer, such as trade in goods and international movement of factors of production. This article critically surveys the literature that explores the roles of trade and foreign direct investment (fdi) as channels of international technology transfer. With respect to fdi, a distinction is made between wholly owned subsidiaries of multinational firms and international joint ventures. Furthermore, the role of fdi is contrasted with that of arm's-length channels of technology transfer, such as licensing. Although the literature has done a decent job of outlining the various channels through which international technology transfer occurs, not enough is known, both

No abstract