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Multinational Enterprises,Technology Diffusion,and Host Country Absorptive Capacity: A Note
Authors:Khaled Elmawazini  Pran Manga  Samir Saadi
Institution:1. Economics Department , Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) , Almaty, Kazakhstan;2. Economics Department , University of Ottawa , Ottawa, Ontario, Canada k.elmawazini@alumni.uottawa.ca;4. Telfer School of Management , University of Ottawa , Ottawa, Ontario, Canada;5. Queen's Business School , Queen's University , Kingston, Ontario, Canada
Abstract:Abstract

Previous empirical studies show mixed support for the hypothesis that the impact of technology diffusion from multinational enterprises (MNEs) on host country productivity growth depends on host country absorptive capacity. One explanation is that the results of these empirical studies are sensitive to the measures of absorptive capacity used. This paper contributes to the empirical literature by investigating average years of schooling and total factor productivity gap as measures of host country absorptive capacity in 38 developed and developing countries. Panel data regression equations are estimated using a cross-sectionally heteroskedastic and timewise autoregressive (CHTA) model. The paper has two main results. The first result does not support the hypothesis that the technology diffusion from MNEs has a positive impact on the productivity growth in developing countries. The second result is that the total factor productivity gap is more appropriate than average years of schooling to measure host country absorptive capacity. This may suggest that the results of previous studies that used average years of schooling should be interpreted with caution.
Keywords:Multinational enterprises  technology diffusion  absorptive capacity  productivity growth  human capital
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