Publication

This paper analyzes the impact of imported technologies on productivity in developing country firms and links this to the debate on trade liberalization. It uses panel data on a sample of Indian manufacturing firms from 1977-1987 to conduct its analysis. It finds that firms in India’s liberalizing economy can increase productivity by importing greater amounts of foreign technologies; however, this discourages them from investing in research and development (R&D). The author urges developing country policymakers to refrain from adopting restrictive trade policies that obstruct vital import channels and to devise policy tools that encourage R&D to make up for the gap.