The impact of licenses on a “late-starter” LDC: Chile in the 1990s

Abstract

The acquistion of technology through licenses is a potentially important means of accelerating productivity growth, especially in "late starter" developing countries in the throes of "catch up". Yet the literature has tended to focus on the potential benefits to the seller, overlooking those to the purchaser (our own concern). We find that expenditures on licensing showed exceptionally high rates of return, of the order of twice those in investment in physical capital, significantly improving firms' performance and productivity in Chilean industry during the 1990s. We conclude that licensing can be an important instrument for speeding catch up in LDCs.