Knowledge Diffusion, Supplier's Technological Effort and Technology Transfer via Vertical Relationships

Ai Ting Goh

No 4085, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies the effect of knowledge diffusion on the incentives for developed countries? (DC) firms to undertake costly transfer of production knowledge of an input to their developing countries? (LDC) suppliers whose costs of production vary inversely with their technological effort. We distinguish between upstream knowledge diffusion, which occurs when the technology diffuses to other suppliers not directly engaged in the technology transfer process, and downstream knowledge diffusion, which occurs when other buyers learn from the incumbent DC firm to procure the same input from the trained LDC supplier(s). We show that when the cost of improving production efficiency is high, and hence where the incentive for technological effort is low, technology transfer is encouraged (discouraged) by upstream (downstream) knowledge diffusion. When, however, the cost of engaging in technological effort is low, and hence where technological effort has a significant impact on the input price, the opposite results obtain: upstream knowledge diffusion discourages technology transfer as increased competition reduces the incumbent supplier?s incentive to undertake technological effort thus lowering the value of technology transfer for the DC firm. Downstream knowledge diffusion encourages technology transfer by increasing the demand for the supplier?s product and hence the technological effort undertaken.

Keywords: Technology transfer; Technological effort; Developing countries; Knowledge diffusion; Buyer-supplier (search for similar items in EconPapers)
JEL-codes: F23 L13 O14 O19 O32 O33 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-dev, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://cepr.org/publications/DP4085 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Knowledge Diffusion, Supplier's Technological Effort and Technology Transfer via Vertical Relationships (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4085

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4085

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().