وابستگان خارجی، پیشرفت تکنولوژیکی و رشد بهره وری: شواهد از کشورهای نفتی MENA و کشورهای غیر نفتی  Foreign affiliates, technological catch-up, and productivity growth: Evidence from MENA oil and non-oil-  producing countries

1. Introduction Previous studies show mixed support for the hypothesis that foreign affiliates are the main channel of embodied knowledge flows (Lall, 2001). The share of foreign direct investment (FDI) inflows to the MENA region in global FDI has increased in the past decade (see Table A.1, appendix A). Specifically, 59% of the FDI inflows to MENA countries in 2010 were for four countries: Saudi Arabia (37%), Egypt (8%), Israel (7%), and Qatar (7%). Most FDI to the MENA region does not flow to the manufacturing and information and communications technology (ICT) sectors, which are more relevant to technology diffusion than other sectors are (e.g., natural resources or tourism).1 Barro and Sala-i-Martin (1997) indicate the importance of technology diffusion as a channel of economic growth in developing countries. Fransman (1985) indicates that international technology diffusion uses two different types of transactions. The first is “formal” transactions, which include joint ventures, licensing, and goods trade. The second is “informal” transactions, which include linkages between multinational enterprises (MNEs) and local firms as well as scientific exchange. In both modes, MNEs are the main source of technology diffusion (Lall, 2001). Blomstrom and Sjoholm (1998) argue that foreign affiliates may affect the productivity of local firms in two aspects. First, MNEs have strong technological and financial capabilities that allow them to compete with local firms. Second, the entry of MNEs encourages local firms to improve their capabilities to become competitive with foreign affiliates. This may force local firms to change their production techniques and their managerial skills. With these two aspects in mind, this study investigates the ability of MENA countries to absorb technology diffusion from foreign affiliates. Specifically, this study contributes to the empirical literature by investigating the impact of FDI on labor productivity (not economic growth)2 in MENA countries. Previous studies have focused on the determinants of FDI and the impact of FDI on economic growth in MENA countries (see Ahmadi & Ghanbarzadeh, 2011, for a review). In addition, this study develops a simple theoretical model to illustrate the link between foreign affiliates, technological catch-up, and host-country labor productivity growth. The remainder of this study is organized as follows. Section 2 discusses the main theoretical approaches and empirical difficulties in testing the technology diffusion from FDI. Section 3 provides the empirical specifications. Section 4 discusses the data sources. Section 5 indicates the empirical findings. Section 6 offers a conclusion and policy implications.