Technology Upgrading in Emerging Economies

Abstract

The chapter applies a newly developed approach to technology upgrading to a sample of sixteen economies during 2002–16. The “Index of Technology Upgrading” is based on three complementary, but autonomous components that proxy for three different dimensions of the technology upgrading process: scale or intensity of technology activities (A); breadth or scope of technology upgrading activities (B); and interaction with the economy related to technology exchange (C). The results of our study reveal facets of the technology upgrading process and the relative positions of countries, which conventional mainstream approaches and composite indicators do not make evident. We conduct an econometric exercise, which shows that the index of technology upgrading contributes significantly to explaining changes in both total factor productivity and labor productivity, but that the index of technology exchange has no explanatory power. This latter result suggests that to contribute to increased productivity, openness to technology exchange needs to be complemented by domestic technology accumulation activities.