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An Open or Closed Technology Policy? The Effects of Technology Licenses, Foreign Direct Investment, and Domestic and Interna
Working paper
Brian Fikkert
September 1994 |
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As part of its current economic reform package, India has relaxed its restrictions on FDI and TP licenses, and stronger patent protection may be on the horizon following the Uruguay Round of the GATT negotiations. Of concern to many Indian policymakers is whether these regime changes will inhibit the development of an indigenous innovative capability, sacrificing
long-run self-reliance in exchange for what are perceived to be dubious short-run benefits.
Using panel data on 571 Indian firms from 1975/76-1978/79, a period in which all three features of India’s closed technology policy were in place, the following paper estimates a model in which both R&D and TP are choice variables for which comer solutions, i.e. the choice of zero expenditures, are possible. Treating both R&D and TP as endogenous variables avoids the problems of simultaneity which have plagued previous studies and allows a proper examination of the effects of the technology licensing regulations on R&D. In addition, since one of the explanatory variables is an indicator for whether or not the firm has a history of FDI, it is possible to address the effects on R&D of India’s regulations on FDI.
Finally, pools of domestic and international spillover R&D are included as explanatory variables, permitting an examination of some of the effects of a weak patent regime. |
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| Last updated on: 12/20/2006 |
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