The paper examines the determinants of productivity growth in Greece; a country that falls behind the international technological frontier. We set as a benchmark technological leader, the German manufacturing sector, posing the question whether technological transfer from Germany to Greece can generate productivity gains in the latter country. Within this framework, technological transfer can boost productivity growth autonomously but it can also interact with other certain factors such as trade and R&D in improving laggard country’s absorptive capacity. The puzzle of productivity growth in the Greek Manufacturing sector is completed with the consideration of factors related to the general business and institutional environment of the country
