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Foreign Technology Acquisition and Changes in the Real Exchange Rate

Roberto Alvarez () and Ricardo López

No 77, Working Papers from Brandeis University, Department of Economics and International Businesss School

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.

Pages: 27 pages
Date: 2014-10
New Economics Papers: this item is included in nep-int and nep-opm
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http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP77.pdf First version, 2014 (application/pdf)

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Journal Article: Foreign Technology Acquisition and Changes in the Real Exchange Rate (2015) Downloads
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