Technology Transfer and Economic Growth Through Foreign Direct Investment in Transition Economies

Abstract

This study explores the impact of foreign direct investment on both economically developed and developing nations, with a particular focus on transition economies, especially in relation to technology transfer. The findings reveal a notable influence of foreign direct investment on the economic growth of developing and transition economy countries. The analysis covers inward foreign direct investment inflows between 2000 and 2018, highlighting a significant gap in existing research on the determinants of foreign direct investment, particularly concerning transition economies. While previous studies have extensively examined the factors driving foreign direct investment inflows into developed and developing countries, the specific context of transition economies remains underexplored. This paper addresses this gap by investigating the role of foreign direct investment inflows from investor nations in fostering innovation and facilitating technology transfer during the period from 2000 to 2018. The study underscores the importance of Asia as a region of interest, given its significant role in the global foreign direct investment landscape. Foreign direct investment serves as a critical conduit for the transfer of technology from developed to developing and transition economies, enabling these nations to leverage advanced technologies and drive economic growth. By analyzing the patterns and impacts of foreign direct investment inflows, this paper contributes to a deeper understanding of how foreign direct investment can be strategically utilized to foster innovation and economic development in transitioning economies. The findings suggest that foreign direct investment not only supports economic growth but also plays a pivotal role in the dissemination of technology, thereby contributing to the long-term economic advancement of recipient countries.