| dc.description.abstract | In the present paper, I take a closer look at econometric efforts which aim to examine technology transfer through inward foreign direct investment (FDI). The contributions considered are systematized within the framework of the Investment Development Path (IDP) while focusing on some methodological issues. Although there still exist a number of challenges concerning estimation procedures, the following picture emerges. In the early stages of the IDP, foreign owned firms are on average more efficient than locally owned firms, possibly indicating certain ownership advantages of multinational enterprises (MNEs). Spillovers are mostly of the pecuniary kind, though “public good type” externalities may occur in sectors which acquire adaptive abilities. While empirical evidence is mixed, when controlled for selection and simultaneity bias neither direct nor indirect knowledge transfer appears to be present in developed countries. This result may be explained by the tightening of the technology gap. Developed country firms may still exchange experiences to a large extent. Existing estimation techniques simply do not provide sufficient potential for detecting the fundamental relations (that is, whether foreign firms learn from domestic firms, whether domestic firms learn from foreign firms or whether there are mutual advantages from interacting), and should be supplemented | nor |