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Regulation, Markets and Poverty

Edited by Paul Cook and Sarah Mosedale

Regulation, Markets and Poverty incorporates the main policy implications arising from theoretical and empirical research into competition, regulation and regulatory governance in developing countries. This analysis often challenges conventional wisdom and draws on the work of leading experts from a range of disciplines.
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Chapter 4: Technological and Trade Competitiveness


INTRODUCTION Which comes first – success in international trade or competitiveness in technology? Does innovation in technology help a country’s exports become more competitive in international trade? Or does success in international markets provide the incentive for technological advance? And how does domestic competition affect a country’s performance in both technology and international trade? These are the questions addressed in this chapter. Does technological advance drive international trade or is it the other way round? In recent years much research on the OECD countries certainly suggests that for them, success in trade is strongly influenced by their technological competitiveness (Archibugi and Pianta, 1994; Laursen, 2000). And indeed recent research on the East Asian economies indicates that this was also the case in Hong Kong, South Korea and Singapore (Uchida and Cook, 2005a). But the relationship between trade and technology is likely to be more complex than this since, for instance, being export-orientated itself generates incentives for technological advance. Therefore, we might expect a two-way relationship between trade and technology (Lall, 1992). And in fact our results show that the situation in ‘catching up’ economies in general is not the same as in OECD countries. BEFRIENDING THE MARKET OR STIMULATING IT? How does a country come to specialize in a particular export, that is, become competitive in a particular industrial sector? Evidence suggests that this is the result of a learning process within the country and sector involved, which has increased the necessary technological capabilities, however limited (Lall, 2000). Opinion...

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