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Foreign Technology Acquisition and Changes in the Real Exchange Rate

Author

Listed:
  • Roberto Alvarez

    (University of Chile)

  • Ricardo A. Lopez

    () (International Business School, Brandeis University)

Abstract

This paper uses plant-level data from the manufacturing sector of Chile to investigate how changes in the real exchange rate affect the decision to purchase foreign technologies through licensing. Theoretically, a real depreciation has an ambiguous effect on foreign technology adoption. On the one hand, a real depreciation makes exports more competitive, and since exporters tend to adopt and use more advanced technologies, we should observe a higher propensity to import technologies among them. On the other hand, a real depreciation can also make imports of technology relatively more expensive. Thus, this question must be examined empirically. The empirical analysis shows that a real depreciation significantly increases the probability of using foreign technology licenses for plants that export and for plants in the intermediate range of the size and productivity distribution.

Suggested Citation

  • Roberto Alvarez & Ricardo A. Lopez, 2014. "Foreign Technology Acquisition and Changes in the Real Exchange Rate," Working Papers 77, Brandeis University, Department of Economics and International Businesss School.
    • Handle: RePEc:brd:wpaper:77
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    References listed on IDEAS

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