Abstract

How Economic Growth can be stimulated? This question has called the attention of every policy maker and economist to find the answer. What factors can affect the economic growth? The answer of this question is unclear so far. After the endogenous growth theory as given by Romer (1986, 1990), Lucas (1988) and Grossman and Helpman (1991) Knowledge is being considered as an important and endogenous determinant of Economic growth. The latest knowledge (Technology) is essential for developing countries to catch-up with developed economies. Economic liberalization refers to both trade liberalization and financial liberalization. Trade liberalization means reduction in trade restrictions like tariff, quota or other trade barriers which discourage the international trade. On the other hand, more capital inflow and outflow as a result of Foreign direct investment (FDI), portfolio investment or worker remittances show that the country is financially integrating with rest of the world. How the economic liberalization affect the Economy of any particular country. Whether this economic liberalization is good or bad for developing country has become a huge policy debate.

Key words: Technology transmission, Liberalization, R&D Spillovers, Foreign direct investment (FDI).