Foreign Direct Investment and Technological Capacity: The Efficiency of Technology Transfer in Transition Economies

The main argument that technology transfer provided through foreign direct investments improves technological capacity in host country economies is frequently discussed in the literature. In this context, the purpose of the study is to contribute to the investigation of the efficiency of technology transfer in transition economies in terms of the relationship between foreign direct investments and technological capacity. The econometric process belonging to panel data analysis was followed by using the data of the countries for the period 2007-2020. First of all, the stationarity of the series was tested with panel unit root tests, and then the existence of a long-term relationship was determined with panel cointegration tests. The findings confirm the cointegration relationship between foreign direct investment inflows and high-tech product exports. DOLS and FMOLS estimators were used to obtain long-term coefficients. The results of the analysis indicated that foreign direct investment inflows have a positive and significant effect on high-technology product exports. Finally, according to the panel Granger causality test, there exists a bidirectional causality relationship between foreign direct investment inflows and high-tech product exports.