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Knowledge diffusion, input supplier¡¦s technological effort and technology transfer via vertical relationships

Ai-Ting Goh

JIE (2005)

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l   The current trend towards international outsourcing provides an

important opportunity for developing countries to obtain greater

technology spillovers from developed countries.

l   When it is costly to improve production e¢ ciency, price

competitiveness is facilitated by widespread di¤usion of technology

among potential suppliers.

l   If production e¢ ciency is less costly to achieve, price competitiveness of the input industry is best achieved by maximizing the incentive for the incumbent supplier to reduce cost, which is in turn encouraged by weaker knowledge spillovers.