The impact of technological transfer from foreign direct investment (FDI) on host economies : the case of Albania.

Technological transfer through FDI to domestic companies is at the center of current debates about industrial and economic development. The purpose of this thesis is to investigate the direct and indirect/spillover technological effects through FDI presence in the Albanian manufacturing sector. Thus, it examines whether technology, knowledge and skills are transferred to the domestic companies in Albania, which in turn enable them to learn, innovate and upgrade. The thesis also examines the mechanisms and determinants or conditions necessary for the occurrence of direct effects and spillover process. To serve this aim, we proposed an alternative conceptual framework and an integrated approach using firm level surveys and case studies, in order to find out whether the presence of MNEs stimulates direct and spillover effects. Based on the data provided by survey study, we computed a technological transfer index, which offers important insights on the extent to of technology transfer. In the context of an underdeveloped country like Albania, it is important to investigate the role of FDI. Anyone can imagine that Albania is a technically underdeveloped country and needs technology to stimulate industrialization and development. Ironically, the country has not attracted interest from researchers but constitutes a very interesting case in point given its specific characteristics. Results obtained showed positive direct technological effects from parent company to the subsidiary including direct transfer of technology, knowledge and skills, expertise, training. However, results provided limited evidence on indirect effects. This was as result of limited contact of foreign companies with local suppliers, customers and competitors. Nevertheless, in case that these contacts exist there is evidence of positive spillover effects. Spillover effects are expected to increase in the future. In general, FDI seemed to play an important role in the upgrading of the local manufacturing industry and in the industrialization of Albania.