Globalization, technology transfer, and skill accumulation in low-income countries

Globalization has drastically improved access of technological latecomers to advanced technologies and provides a unique opportunity for low-income countries to raise per capita income. This paper shows that low-income countries as a group have in fact substantially increased the GDP-ratio of technology imports over the past few years, but that there are large cross-country discrepancies in technology upgrading within this group. General-purpose technology continues to constitute the bulk of technology imports, while sector-specific technology used for labour-intensive activities has gained in importance. Improved access to technology imports appears not to have improved labour productivity and the demand for skilled labour in many low-income countries. To raise the benefits reaped from globalization, governments might need to make additional efforts towards a simultaneous increase in technology imports and the skill level of the domestic labour force.