Investigating the impact of technology transfer resulting from foreign direct investment on productivity changes in Iranian industry

Subject Areas : Economic Development, Innovation, Technological Change, and Growth

Hossein Mohammadi ¹ , Kambiz Hojabr Kiani ² , Ali Emami Meibodi ³ , Hamid Shahrestani ⁴

1 - PhD. Candidate in Economics, Department of Economics, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran, [e-mail]
2 - Professor of Economics, Department of Economics, Faculty of Economics and Management, Science and Research Branch, Islamic Azad University, Tehran, Iran, [e-mail]
3 - Professor of Energy Economics, Department of Energy Economics, Faculty of Economics, Allameh Tabatabai University, Tehran, Iran, [e-mail]
4 - Professor of Economics, Department of Economics, Faculty of Economics and Management, Science and Research Branch, Islamic Azad University, Tehran, Iran, [e-mail]

Received: 2025-06-28 Accepted : 2025-07-09 Published : 2025-07-19

Keywords: total factor productivity, absorptive capacity, technology transfer, foreign direct investment,

Abstract :

The importance of technology as an engine of economic development in today's world is clear. Creating technology requires investment in research and development and training of human resources. Given the low investment rate of developing countries on research and development and training and the long process of converting research ideas into economic products, the technological gap between developing and advanced countries is increasing day by day. Given the limited human, capital, and time resources, the only practical way to compensate for the backwardness of a country or an economic enterprise is to use the successful experiences of others in new areas. Technology transfer, which is carried out through two sources of trade and foreign direct investment, is a shorter way to achieve the results of other countries' research in solving the problems of the country's industries and, more precisely, the country's economy. This can be determined from the amount of changes in the country's total factor productivity. Therefore, in this thesis, the effect of technology transfer resulting from foreign direct investment on the one hand and domestic absorption capacity on the other hand on productivity changes in the country's industry has been studied using the data envelopment analysis (DEA) method and the Malmquist index. Using the combined data of industrial workshops with ten or more employees, technical progress, changes in technical efficiency, changes in net technical efficiency, changes in scale efficiency, and changes in total productivity have been calculated. The results of the Malmquist index by industry show that in the 13-year study period, the productivity industries has decreased. On the other hand, technology transfer through foreign direct investment strengthens the role of human capital in improving productivity, and when the absorption capacity of industries is high, it will lead to greater productivity

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