Evaluation the FDI Spillover Effects on Labor Productivity in Iran’s Manufacturing Sector

According to many economists, the per capita income gap between developed and developing countries is due to significant technological gap between them. Emperical studies suggest that, if developing countries are faced with technological limits the inflow of FDI may act to reduce the technological gap, which would lead to technological transfer that, in turn, could result in increasing productivity. This kind of technological transfer is called technology overflow. Technology spillover of foreign direct investment, technology imports and domestic R & D , in addition to the traditional factors of production labor capital) can, through technological development labor , affect the performance of the industrial sector. Given the crucial role of the Industrial sector in Iran's economy, the present study investigates the effect of the technology spillover from foreign direct investment on labor productivity in Iran's industries during 1376-1390. This study uses panel data to suggest that technological spillovers from FDI have significantly positive effects on labor productivity. The impact of domestic R&D spending and imported technology on labor productivity is positive and significant.