The impact of trade liberalisation on technological upgrading. A Schumpeterian approach illustrated with data from Argentina

ARZA, VALERIA

VDM Verlag Dr. Müller

Lugar: Saarbrücken; Año: 2009 p. 64

978-3-639-02881-2

In the context of structural adjustment reforms, developing countries have been challenged to liberalise and simplify their trade policies. The prevailing orthodoxy in economic theory has justified this switch in policies, claiming that it would foster growth and efficiency. The impacts of trade liberalisation on technological development are particularly important because of their dynamic long-term effects on the economy. The relation between technology and import liberalisation is nevertheless quite controversial. There is no complete accord, even inside similar schools of thought. Here the arguments will be classified according to two main hypotheses. The first includes the new growth theory propositions, based primarily on the broadening of access to international up-to-date sources of knowledge and on the positive effect that competition may have on innovative behaviour. The second hypothesis focuses on the need for developing countries? firms to achieve indigenous capabilities in order to adopt and benefit from available technology; and also on the capabilities of local firms to appropriate from their innovative efforts even when competing with imports from technologically superior producers. According to this view, trade might threaten the development of those capabilities, because domestic efforts (or their rewards) are undercut by competition with foreign know-how or because the international division of labour imposes on developing countries the task of specialising in less dynamic technologies. This book attempts to weigh the benefits under the first hypothesis against the negative effects stemming from the second. It consists of discussing theoretically the effects that trade has on a model of technological upgrading that will first be characterised using the Schumpeterian literature. Arguments for both hypotheses on trade and technology mentioned above will be considered, and the reasoning will be illustrated with descriptive and econometric statistics from Argentina during the 1990s. 2 The book is divided into five major Chapters and a conclusion. 1 The first chapter critically discusses the main theoretical arguments that relate trade liberalisation with technology upgrading. The second chapter analyses the sources and conditions for technological change in the light of the Schumpeterian literature and also frames the discussion in a development context. Chapter three links the former two chapters in a Schumpeterian model on trade and technology. In Chapter four we present the data and analyse descriptive findings on the effects of liberalisation. In Chapter five, an econometric exercise characterises the technological model of the Argentinean industrial sector in the 1990s. In the conclusion, trade liberalisation arguments will be reviewed in the light of the empirical findings.