Impact of Foreign R&D Spillover and Human Capital on Technical Efficiency of Factors of Production

On the basis of economic literature related to foreign trade, absorption of technical and managerial knowledge in the process of foreign research and development(R & D) spillover and its compliance with the domestic production conditions require capital investment in the training of the skilled and efficient workforce. The present study aims to answer the basic question that whether the separate and interactive effects of foreign R & D spillover and human capital has been able to enhance the technical efficiency of production factors provided in the importing countries? For this purpose and in order to investigate the effect of foreign R&D spillover and human capital on technical efficiency of factors of production, stochastic frontier analysis (SFA) inspired from Battese and Coelli (1995) model is used to analyse the subject in 23 countries, including 10 countries in second stage of development and 13 countries in third stage of development during the time period 1996-2006. Results show that accumulation of foreign research and development spillover of G7 trade partners, accumulation of domestic research and development, educational expenditures as a sign of educated human capital and life expectancy as a sign of healthy human capital have positive and significant effects on technical efficiency of factors of production in countries under the study, but the level of effect on reduction of technical inefficiency of the countries in third stage of development is more than this effect on the countries in second stage of development.