Which International Technology Transfer Channels are Effective in Raising Firm Productivity and What Role for Policy? Draft

Recognition that the creation of new technology is concentrated in just a handful of countries has motivated the study of the importance of foreign sources of technology for domestic productivity growth (Keller, 2004). In this paper we study the relative importance of foreign ownership, FDI intraindustry spillovers, FDI spillovers through backward linkages, exporting, importing, and acquiring licensing agreements as channels of international technology transfer. In contrast to the existing evidence on this topic, we recognise that access to foreign sources of technology will differ across firms within an industry, and therefore, we use firm-specific measures of global engagement. The data used comes from the Business Environment and Enterprise Performance Survey, which provides detailed plant level information for a stratified random sample of plants in 26 transition economies in Central and Eastern Europe. Our results suggest that foreign ownership, supplying MNEs, exporting and are associated with higher firm productivity. We find no evidence that intraindustry FDI spillovers, importing or acquiring licensing agreements are associated with higher firm productivity