Creating the Capacity to Benefit from Technological Change in Developing Countries
Watu Wamae
#2006-021
What really makes an economy competitive? This paper reviews and
discusses how the capacity to generate, exploit and diffuse new
knowledge is key in enabling countries to capitalise on challenges
brought about by rapid technology-driven transformations rather than
succumb to their adverse effects. In particular, we look at the
importance of new knowledge emanating from both domestic and foreign
sources in the innovation process in view of the contention that
"international technology transfer" is critical for growth in developing
countries. We find that there is a tight link between high rates of
technology acquisition and high investment ratios, and that the
absorptive capacity is a sine qua non of foreign technology benefits.
Keywords: absorptive capacity, knowledge, developing countries, systems
of innovation
JEL: C49, O11, O38
ISSN 1871-9872