The Effect of Protectionism on Technology Sharing and Industrial Development

32 Pages Posted: 3 Oct 2011

See all articles by Serguey Braguinsky

Serguey Braguinsky

Carnegie Mellon University - Department of Social and Decision Sciences

Salavat Gabdrakhmanov

University of Chicago - Department of Economics

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration

David Rose

University of Missouri-St. Louis

Date Written: October 2, 2011

Abstract

It is well-known that firms that compete directly with one another often also cooperate by sharing technical know-how (Saxenian, 1994). In the early stages of industrial development incentives to do so can be particularly strong (Braguinsky and Rose, 2009). Since technological diffusion hastens industrial development and sharing technical know-how hastens technological diffusion, an important question is how incentives to share technical know-how might be affected by infant industry protection. We present a dynamic model of industrial development that links industry protection from foreign competition to the rate of technology diffusion within a given infant industry.

Our model explains how infant industry protection might substantially alter the industrial life-cycle. We show that innovating firms in an unprotected industry will switch from sharing to concealing technical know-how only after the industry becomes large relative to the world market. Under protection from foreign competition, however, concealment begins much earlier in the industrial life-cycle. It follows that protectionist policies may result in industries that never fully realize their potential and remain unable to compete in the world market without continued protection from foreign competition.

Keywords: Technology adoption, Technical know-how, Infant industry development, Small open economies, Less developed countries

JEL Classification: L1, L2, O25, O31, O33

Suggested Citation

Braguinsky, Serguey and Gabdrakhmanov, Salavat and Ohyama, Atsushi and Rose, David C, The Effect of Protectionism on Technology Sharing and Industrial Development (October 2, 2011). Available at SSRN: https://ssrn.com/abstract=1937428 or http://dx.doi.org/10.2139/ssrn.1937428

Serguey Braguinsky (Contact Author)

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Salavat Gabdrakhmanov

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

Atsushi Ohyama

Hokkaido University - Graduate School of Economics & Business Administration ( email )

Kita-ku Kita 9 Nishi 7
Sapporo, Hokkaido, 060
Japan

David C Rose

University of Missouri-St. Louis ( email )

Department of Economics
One University Blvd.
St Louis, MO 63121-4400
United States
314-516-4117 (Phone)
314-516-5352 (Fax)

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