Technological Progress Through Trade Liberalization in Transition Countries
Trade liberalization increases competitive pressures on domestic firms, and thus creates incentives for reducing costs of production through technological progress. Through this channel, backward countries get a chance to narrow their technological gap with more advanced countries. In this paper, the case of transition countries is analyzed. A simple model of oligopolistic firms’ strategic decision on R&D is developed to motivate the empirical analysis. The results suggest that some initial conditions such as size of the initial technological gap, and initial openness to international trade, as well as the stage of the market reforms, in particular, rate of liberalization and structure of domestic markets are important factors in narrowing the technology gap.
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- Gans, J.S., 1995. "Industrialisation with a Menu of Technology: Appropriate Technologies and the "Big Push"," Papers 95/36, New South Wales - School of Economics.
- Daniels, Peter, 1999. "Economic Gains from Technology-Intensive Trade: An Empirical Assessment," Cambridge Journal of Economics, Oxford University Press, vol. 23(4), pages 427-47, July.
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- Dani Rodrik, 1988. "Closing the Technology Gap: Does Trade Liberalization Really Help?," NBER Working Papers 2654, National Bureau of Economic Research, Inc.
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