Handbook on Trade and Development
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Handbook on Trade and Development

Edited by Oliver Morrissey, Ricardo Lopez and Kishor Sharma

This Handbook comprehensively explores the complex relationships between trade and economic performance in developing countries. Insightful chapters cover issues such as trade, growth and poverty reduction; trade costs, facilitation and preferences; sub-Saharan Africa’s reliance on trade in primary commodities, informal cross-border trade, agglomeration and firm exporting; imported technology, exchange rates and the impact of firm exporting; the increasing importance of China in world trade and links between FDI and trade. This Handbook provides an essential overview of trade issues facing developing countries.
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Chapter 17: Imported technology and firm exporting: the case of Chile

Ana M. Fernandes and Ricardo A. López


International markets tend to be more competitive and more demanding in terms of product quality than the domestic markets of most developing countries. For this reason, firms in less-developed countries attempting to export their goods to other more developed countries need to adopt new and modern technologies that allow them to increase their levels of productivity or improve the quality of their products. For firms in developing countries, where innovation activity is relatively low, imported technologies represent the main way to increase the quality of their products or reduce their costs of production. The chapter considers the effect of imported technologies on exporting activity of Chilean manufacturing plants over the period 1995–2007, considering the probability of exporting and export intensity. In this way, we examine whether imported technologies help increase the extensive margin of exports (the number of exporters) or the intensive margin of exports (the amount exported by firms). Direct measures of imported technology are not easy to obtain. The chapter focuses on four variables that proxy for different sources of foreign technology at the sector or plant level: imported machinery and equipment; whether the plant has foreign ownership; purchases imported intermediate inputs; or spends on foreign technology licenses and technical assistance. The main results are that imports of machinery and equipment, imports of intermediate inputs, foreign ownership, and foreign technology licences all have a positive and significant effect on the probability of exporting for Chilean manufacturing plants, while only foreign ownership has a significant effect on export intensity.

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