Abstract

The aim of this paper is to study the effects of the domestic and foreign Research and Development (R&D) on the total factor productivity (TFP) in the case of the developing countries. In other words, it is to determine the important role of the R&D externalities through the commercial opening in the TFP of these countries and the necessary conditions to enable them absorb the technological transfer. To achieve this, we apply a static and non-stationary (FMOLS and DOLS) panel data model of 24 developing countries, on data covering the period from 1996 to 2007. According to the estimates, it seems that the impact of the foreign R&D is greater than that of the domestic one. Therefore, technology transfer has a positive role in economic growth in the developing countries, namely in the economies where the human capital is so important that it helps adapt and assimilate foreign technology.

Key words: Research and Development (R&D), economic growth, panel data, developing countries.