Embodied technology transfer and learning by exporting in the Ethiopian manufacturing sector

ABSTRACT

This paper examined the role of imported inputs, new capital goods and exporting on firm performance using micro data collected over 2000–2011 from manufacturing firms with 10 and above permanent employees in Ethiopia. Performance was measured in terms of labour productivity, total factor productivity (TFP) and TFP catch-up. In this paper, we argue that technologies embodied in imported inputs and new capital goods and export orientation are the crucial sources of learning and innovation, which enhance performance of firms in less-developed countries. The hypotheses developed along this argument were econometrically tested by applying a dynamic panel data technique. Results indicate that exporting, greater use of imported inputs and new capital goods significantly improved the productivity and TFP catch-up of firms. The positive productivity effects of imported inputs and new capital goods appeared to be higher for exporters than non-exporters. New capital goods were seen to play a greater role in embodied technology transfer than imported inputs. The findings generally suggest that improving access to imported inputs, encouraging investment in new capital goods and strengthening export orientation among manufacturing firms can help accelerate technology transfer and build local innovation capabilities towards Ethiopia’s desired structural transformation.

KEYWORDS:

• Manufacturing firms
• importing
• exporting
• new capital goods
• productivity
• technology transfer

Acknowledgments

We are very much thankful for the invaluable comments received from two anonymous referees and the editors of the special issue, which helped us to improve the manuscript. The paper has also benefited from feedback obtained from participants at the Catch-up Seminar (which was held in 2014 at the Center for Economic Catch-up, Seoul, South Korea) and the 12th Globelics International Conference (held in Addis Ababa, Ethiopia).

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCiD

Keun Lee http://orcid.org/0000-0002-0403-6348

Notes

1. Computed as 100 (exp(coefficient) − 1)%.