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Foreign Technology Acquisition and Changes in the Real Exchange Rate
Author(s) -
Alvarez Roberto,
López Ricardo A.
Publication year - 2015
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12253
Subject(s) - depreciation (economics) , productivity , economics , exchange rate , industrial organization , monetary economics , international trade , macroeconomics , microeconomics , profit (economics) , financial capital , capital formation
This paper uses plant‐level data from the manufacturing sector of C hile to investigate how changes in the real exchange rate affect the decision to purchase foreign technologies through licensing. Theoretically, a real depreciation has an ambiguous effect on foreign technology adoption. On the one hand, a real depreciation makes exports more competitive, and as exporters tend to adopt and use more advanced technologies, we should observe a higher propensity to import technologies among them. On the other hand, a real depreciation can also make imports of technology relatively more expensive. Thus, this question must be examined empirically. The empirical analysis shows that a real depreciation significantly increases the probability of using foreign technology licences for plants that export and for plants in the intermediate range of the size and productivity distribution.