Technological Progress Through Trade Liberalization in Transition Countries

Yener Kandogan ()

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: 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.

Keywords: Technology gap; Trade Liberalization; Transition; Market reforms (search for similar items in EconPapers)
JEL-codes: F14 O33 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2003-06-26
New Economics Papers: this item is included in nep-ino, nep-tid and nep-tra
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