International technology transfer, firm productivity and employment

This dissertation contributes to the empirical literature on the effects of international technology transfer on firms' productivity and employment in developing and transition countries. It combines three empirical essays which provide evidence on how participation in international activities affects firms' productivity, how it interacts with firms' absorptive capacity and how it affects firms' demand for skilled labour in 26 transition countries in Europe and Central Asia (ECA) region. The first study investigates whether foreign ownership, supplying multinationals (MNEs) located in the same country, foreign direct investment (FDI) horizontal spillovers, exporting and importing are conduits of international technology transfer and their relative importance for firms in 26 transition economies in ECA region using Business Enterprise and Environment Performance Survey (BEEPS) 2002- 2005. It contributes to the literature by analyzing the impact of all main channels of international technology transfer simultaneously and by using a firm specific measure for supply linkages with MNEs, unlike previous studies that used industry level measures. The main results suggest that foreign ownership, supplying MNEs, exporting and importing are robustly associated with higher firm productivity and we cannot reject the hypothesis that these channels are equally important. The second study examines whether international technology transfer through foreign ownership, supplying MNEs, exporting and importing depends on firm and country absorptive capacity in 26 transition economies in ECA region using the BEEPS 2002 and 2005 waves. The main contributions of this paper are that it uses firm specific measures of access to foreign technology and measures of absorptive capacity (workforce education, personnel training and R&D activities) which are closely related to the concept of absorptive capacity and less prone to measurement errors than productivity gap measures used in previous studies. Our results suggest that access to foreign technology and absorptive capacity are associated with higher productivity, but, contrary to our hypothesis, there is no evidence of an interaction effect between absorptive capacity and access to foreign technology. The third study investigates how participation in international activities affects firms' demand for skilled labour and the ways in which firms respond to changes in demand for skilled labour in 26 transition economies in ECA during the period 2002-2005 using BEEPS 2002 and 2005 waves. It contributes to the literature by studying different ways in which firms respond to changes in the demand for skilled labour (hiring employees from outside the firm or training existing employees) and by studying whether there is a causal relationship between participation in international activities and demand for skilled labour. Our results suggest that firms engaged in international activities have a better educated labour force and are more likely to train their employees than domestic firms. However, this happens because firms with better skilled workforces and with formal training programmes select into participating in international activities, and not because these firms upgrade the skills of their workforces after starting to participate in international activities