Conference Proceeding

TECHNOLOGY TRANSFER, TRADE AND FOREIGN DIRECT INVESTMENT IN ALGERIA: AN EMPIRICAL STUDY

Kafia, Benahmed, Ribeiro, Humberto Nuno Rito, Ouidir, Souman Mohand

2024

Overview

Technology transfer (TT) via EDI (Foreign Direct Investment) is considered to be a catch-up and economic growth process for imitator countries (the South), in the same way as international trade. However, the process is not as simple and does not occur automatically (exogenously). According to a theoretical support submitted for analysis, a problem of endogeneity has been detected at the level of technology transfer from MNCs to domestic firms. This work proposes to analyse the dynamics of Technology Transfer (TT) through EDI in the case of the Algerian economy for the period (1970 and 2012). The methodology adopted consists firstly of using the growth accounting technique to identify the technological level or Total Factor Productivity (TFP). Empirical analyses were then carried out using the VAR and VECM models. The results show that FDI contributes negatively and significantly to TT, while the long-run dynamics of TT are explained by economic openness. The introduction of interactive terms shows that human capital does not contribute to TT in the case of FDI, but its impact is significantly positive in the case of openness. To take advantage of technological spillovers from Multinational Firms (MNFs), Algeria must improve its absorption capacity and the environment in which MNFs and domestic firms interact.

• Publisher: Varazdin Development and Entrepreneurship Agency (VADEA)
• Subject: Economic development / Economic growth / Economics / Empirical analysis / Externality / Foreign investment / Host country / Human capital / Hypotheses / International trade / Manufacturing / Productivity / Technology transfer