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Abstract

This paper uses the World Bank's Enterprise Surveys as a sample of 18 developing and emerging economies to investigate the causal relationship between global value chains and the transfer of technology to manufacturing firms in developing nations. It focuses on one specific channel for technology transfer, namely the licensing of foreign technology. By using a propensity score matching difference-in-differences technique, I show that there is a positive and causal impact of being involved in complex international activities (i.e. being a two-way trader) on the licensing of technology. Importantly, domestic firms becoming two-way traders are more likely to acquire foreign-licensed technology than domestic firms starting to either export or import. These findings suggest that the complexity associated with the trading activity determines whether or not foreign technology is licensed.

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