AbstractWe investigate whether and how technical cooperation aid (TC) facilitates technological diffusion from developed to developing countries, comparing it with foreign direct investment (FDI) and external openness. Two robust findings emerge. First, TC, FDI and openness all contribute to international technology transfers and openness seems to contribute the most, which is followed by TC. Second, around 6–17 countries out of 85 in our sample fail to catch up to the technological leader over the 36 years. These results suggest that as a policy instrument, TC can play an important role in facilitating technological catch up of developing countries. Copyright © 2010 John Wiley & Sons, Ltd.