v16_2005l - Openness, R&D, and Growth: Differences in...

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227 Openness, R&D, and Growth: Differences in Latin American and East Asian Policy and Political Economy 7 11 Glauco A. S. Oliveira is a Ph.D. candidate in Political Economy and Public Policy at the University of Southern California (goliveir@usc.edu). O PENNESS , R&D, AND G ROWTH : D IFFERENCES IN L ATIN A MERICAN AND E AST A SIAN P OLICY AND P OLITICAL E CONOMY Glauco A. S. Oliveira This paper reviews recent theoretical and empirical literature relating openness, research and development (R&D) poli- cies, and growth in developing countries. Although there are indications that openness is associated with improvements in productivity due to technological spillovers, active R&D policies and complementary institutions (intellectual property rights) play an important role in bringing about such gains. The article compares East Asia and Latin America, with special attention to the latter. The puzzle is that both regions opened their economies and carried out a set of similar industrial and technological strategies, yet their experiences in growth and R&D performance are divergent. After considering differences in each region’s pace of integration into the world economy, the analysis moves to a closer look at the political economy of policy formation in Latin America and East Asia. The paper is divided into four sections. The Frst section introduces the debate; the second encompasses a comprehensive theoretical and empirical literature review; the third discusses the policy and political economy experiences of the regions. ±inally, the conclusion offers policy recommendations for Latin America, based on the success of the East Asian experience. 1
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228 Glauco A. S. Oliveira I NTRODUCTION The question of whether integration into the world economy has positive implications for economic development is one of the most recurrent issues in the political economy Feld, dating back to the work of Adam Smith and David Ricardo. Economic theory suggests that openness 2 is conducive to growth due to potential efFciency gains derived from division of labor and comparative advantages. There is an ongoing discussion in the empirical literature, especially with respect to the policy orientation of developing countries, questioning if outward-oriented countries grow faster (Bald- win 2003). This debate has continued into the present, with ever more relevance after World War II. Multilateral and regional trade negotiations and institutions have been established to promote free trade, representing a mechanism to encourage economic development. More recently, trade talks have sought to address the liberalization of the institutional framework in which the economies of signatory coun- tries operate. Agreed norms include not only measures to facilitate the free flow of goods, but also issues such as rules of investment and intel- lectual property rights (IPR) protection. IPR protection and its proper enforcement is a necessary condition to create incentives that will lead to
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v16_2005l - Openness, R&D, and Growth: Differences in...

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