Abstract
Abstract: This paper investigates the long-run equilibrium relationships and short-term effect of international trade and Foreign Direct Investment (FDI) on international technology transfers in selected African and Asian countries from 1980 to 2013.The Johansen and Juselius multivariate co-integration technique and the granger causality test was used to test these relationships. The findings confirmed the presence of co-integrating vectors in the models of these countries. The outcome of the test posits short-run causal relationships, which run either bidirectionally or unidirectionally in all the variables for the selected countries. However, the most interesting lesson for many developing countries in Africa and Asia is that this study confirmed that international technology transfers supported domestic investment, economic growth, exports and imports of goods and services in some of these countries. Finally, all the variables in each model adjusted to equilibrium in the long-run, except for domestic investment in the Malaysian, Nigerian and Indian systems. The study thereby suggests an improved government policies and regulatory framework to improve international technology transfers, domestic investment, economic growth, and exports and imports of goods and services.Keywords: International Technology Transfer, Foreign Direct Investment, Trade, Vector Error Correction Modeling, Africa, Asia
Highlights
There is increasing debate in both theoretical and empirical literature concerning the perceived benefits of a country’s openness to trade (Fosfuri, Motta & Ronde, 2001; Meyer, 2004; Usman and Ibrahim, 2012; Anyanwu & Yameogo, 2015)
The general feeling is that traditional analyses often minimize the cost of protectionism (Saggi, 2002). Underlying this assumption is the belief that international trade, foreign direct investment (FDI), and the interaction among countries in numerous other forms – all contribute to improvement in the global allocation of physical resources and transmitting technology worldwide (Dollar, 1992; Sachs &Andrew, 1995; Iršová & Havránek, 2013)
There were 3 vectors in the Malaysia, South Africa and China systems, while four (4) cointegrating vectors were experienced in Thailand’s, Nigeria ‘sand India’s models (Asteriou & Hall, 2007; Clark et al, 2011). This implied that while the variables in Malaysia, South Africa and China have long-run equilibrium relationships and were adjusting via three identified channels in the shortrun, the Thailand, Nigeria and India variables did the same adjustment through 4 channels (Buchanan et al, 2012; Asteriou & Hall, 2007; Onafowora & Owoye, 2006)
Summary
There is increasing debate in both theoretical and empirical literature concerning the perceived benefits of a country’s openness to trade (Fosfuri, Motta & Ronde, 2001; Meyer, 2004; Usman and Ibrahim, 2012; Anyanwu & Yameogo, 2015). Many studies in developing countries justifies the imperative of technology as an important tool of economic growth, improved balance of trade and poverty reduction, in the present global economic environment (Anyanwu, 2012; Reece & Sam, 2012; Tian, 2007; Mohamed & Sidiropoulos, 2010) This is on the premise that the process of acquiring and increasing the number of technology transfers and people with the requisite knowledge, skills and experience invariably increases the level of economic growth in many developing countries (Saggi, 2002, Lim, 2001). Okejiri (2000) and Mohamed and Sidiropoulos (2010) studies on Nigeria and MENE countries observed that on average, nations that have sustained high levels of technology transfers are those who have, higher levels of economic growth and development
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