What level of international technology should developing countries transfer to sustain their economic growth?

This study provides an answer to a central question that remained unanswered in the economic literature: What level of international technology should developing countries transfer to sustain their economic growth? The study uses the Granger causality panel data approach to examine the bidirectional relationships between total factor productivity growth rates (TFPGR) and three levels of technology transfer, namely low, medium, and high-technology. The study uses a panel of 18 emerging markets and 22 developing countries and covers the period from 1990 to 2019. Our results show that the three levels of technology transfer cause TFPGR in a significant number of emerging markets but in an insignificant number of developing countries. The reverse relationships take place in an insignificant number of emerging markets and developing countries. Based on the findings of the emerging panel, this study suggests that the three levels of technology transfer are equally needed to increase the stock of knowledge and sustain the economic growth in developing countries. Developing countries urgently need low levels of technology to develop their basic technological capabilities required to adapt to high levels of technology. On the other hand, developing countries need high levels of technology to differentiate their products so that they can integrate into world markets and sustain economic growth in the long run. Our results also suggest that pursuing vigorous productivity policy is not expected to stimulate the technology transfer in emerging and developing economies. The study recommends that governments in developing countries actively intervene in international technology transfer.