Accumulating Technological Capability in Developing Countries

Abstract

In the early stages of development the accumulation of technology is influenced by factor endowments and intersectoral linkages. In later stages the level of technological knowledge itself can become a source of comparative advantage, reflected in production know-how, the design of capital goods, and a capacity for reverse engineering and imitative research and development. Evidence shows that firms play a central role in this process and that, contrary to received wisdom, production capacity does not lead automatically to technological capacity in developing countries. Market-related institutions tend to undervalue technological accumulation; it is essential that the development banks do not follow suit in the projects and programs they finance.

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