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Foreign Technology Transfer and Productivity

We examine the causal effects of alternative foreign technology transfer channels on the productivity of Turkish manufacturing plants, using propensity score matching techniques that limit implicit assumptions about plant homogeneity and self selection imbedded in standard estimates of such effects. We find positive impacts of technology transfer through foreign direct investment (FDI), exporting, and importing on both total factor and labor productivity, with FDI dominating and importing the least significant. Further, although internationally linked plants on average exhibit better productivity and differing characteristics than domestic plants before matching, the closeness of the matching indicates that remaining productivity gaps are caused by foreign technology transfer.