The cost of technology licensing and the transfer of technology

The paper analyses the role of technology licensing in the industrial development of poor countries and the degree to which the prices they pay for technology agreements are excessive. It is argued that in the early stages of industrial development, licensing agreements in industrially advanced sectors are not relevant to the bulk of poor countries. As countries enter into more advanced sectors, technology licensing agreements become more important. Whether poor nations pay excessive amounts for technology transfers is analysed and shown to depend on differing perceptions between licensors and licensees of the appropriate price.