Foreign technology licensing, productivity, and spillovers

This paper uses plant-level data from the manufacturing sector of Chile to investigate whether foreign technology licensing generates productivity spillovers to other plants in the same industry and to other plants in vertically related industries (potential suppliers and buyers of output). The results show that licensing in upstream sectors increases productivity of plants that purchase intermediate inputs from them. However, licensing in downstream sectors has a negative effect on productivity of suppliers of intermediate inputs. Finally, there is no evidence of intra-industry spillovers from foreign technology licensing. (c) 2007 Elsevier Ltd. All rights reserved.