Dynamic analysis of innovation and international transfer of technology through licensing

Abstract

This paper develops a quality-ladder type dynamic general equilibrium model with endogenous innovation and technology licensing as a major source of international technology transfer in developing countries. Examining the dynamic characteristics of the model fully, we explore the short-and long-run effects of both an improvement in the probability of reaching a licensing agreement with a given effort and an increase in the license fee rate. The model shows that the former promotes innovation and technology transfers in both the long and short run, while the latter discourages them.

Government expenditure, taxation and long-run growth

“…Transitional dynamics are important for analyzing the impact of fiscal policy on economic growth for two respects: (1) according to Tanaka et al (2007), growth effect of government policy on economic growth may be quite different when the economy is on the balanced growth path or in the transitional dynamics; (2) the transitional period may last too long, according to Barro and Sala-i-Martin (1995), this process will last more than 50-70 years. Just as Futagami et al (1993), we can examine the transitional effects of fiscal policy on economic growth.…”

Fostering Dynamic Capabilities of SMEs. The Impact of Inward International Licensing on Absorptive Capacity and Networking Capability : A Multiple Case Study in Pharmaceutical Industry

“…Unlike equity strategic alliances, few studies have been carried out in the emerging economies context to understand firms' capability development by IIL. For instance, as noted previously, many researchers have stated that inward licensing has significant effects on the firm's capabilities (Tanaka et al, 2007;Tsai and Wang, 2007;Wang and Zhou, 2013). However, they have rarely explained which aspects or components of a given capability will be more influenced, and why and how they are influenced.…”

“…In this regard, there are various motivations behind of this type of internationalization (as shown in Table 1). Learning by doing or learning by licensing and capability building or capability development are the two most important issues, which are followed by firms in emerging economies to strengthen and develop their position in the competitive market (Tanaka et al, 2007;Tsai and Wang, 2007;Wang and Zhou, 2013). Following this line of thought, many researchers have noted that small firms often exploit licensing alliances with large partner firms to transfer technology and develop their capabilities (Atuahene-Gima, 1993, 1992Kollmer and Dowling, 2004;Lowe and Crawford, 1983).…”

“…For example, companies use IIL as an effective tool to realize different goals in developing countries. For instance, grasping new products, capability development, technology enhancement, acquisition of new processes, reputation, learning, and saving costs and time have been regarded as the main objectives (Johnson, 2002;Mogee, 1991;Tanaka et al, 2007).…”

Dynamic analysis of location choice by multinational firms

“…They showed that there exists an equilibrium in which some firms produce in the North and some firms produce in the South. In a separate strand of the literature, Tanaka et al (2007) assumed that final goods producers incur the costs in successfully negotiating licenses with Southern firms. When the final goods producers have successfully negotiated licensing, they can produce in the South.…”