Estimating Technical Progress In Central And Eastern Europe. What Role For FDI?
Technical progress is a key factor in economic growth, mainly due to its productivity enhancement. It is a fact that most innovation and new technologies are created in developed countries. International trade and FDI are the main channels for technology transfer. The authors' objective is to determine the role of FDI in technical progress. In this paper, they start with two questions: is there evidence of significant contribution of technical progress to economic growth? And if there is, what is the role of FDI in technical progress? Using a production function approach, they estimate the TFP and they regress it on the stock of FDI, in a panel framework. They find evidence of positive correlation.