Journal of Evolutionary Economics

, Volume 16, Issue 1–2, pp 137–153 | Cite as

To innovate or to transfer?

A study on spillovers and foreign firms in Turkey
  • Aykut LengerEmail author
  • Erol Taymaz
Regular Article


FDI has been considered by many development economists as an important channel for transfer of technology to developing countries. It is suggested that modern, advanced technologies introduced by multinational firms can diffuse to domestic firms through spillovers. In this paper, we study innovation and technology transfer activities of domestic and foreign firms in Turkish manufacturing industries, and the impact of horizontal, vertical and labor spillovers on these activities. Our analysis shows that foreign firms are more innovative than their domestic counterparts, and transfer technology from abroad (mostly from their parent companies). Horizontal spillovers from foreign firms seem to be insignificant. The effects of foreign firms on technological activities of other firms in vertically related industries are ambiguous. High-tech suppliers tend to have a high rate of innovation when the share of foreign users is high, but the opposite is true for users: high-tech users supplied mainly by foreign firms tend to have a lower rate of innovation. Labor turnover is found to be the main channel of spillovers. Our findings reiterate the importance of tacitness of knowledge, and confirm that technology cannot easily be transferred through passive mechanisms.


FDI Innovation Technology transfer Spillovers Productivity 

JEL Classification

O14 O33 O31 F23 


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Copyright information

© Springer-Verlag 2005

Authors and Affiliations

  1. 1.Department of EconomicsEge UniversityIzmirTurkey

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