Financial constraints, Technology Transfer and Organizational Form ∗ PRELIMINARY AND INCOMPLETE- PLEASE DO NOT QUOTE

In developing countries, transfer and assimilation of technologies de-veloped in more industrialized countries constitute a major source of pro-ductivity growth. In this paper, we develop a simple model to show that financial constraints may have an impact on technological knowledge that is transferred from a global buyer to a local supplier. The model pre-dicts that, when capital markets are perfect, high technology transfers are inferred while the supplier is more likely to operate as an independent firm. When the supplier has limited access to credit, technology transfers are reduced and vertical integration may be the preferred organizational form. Empirically, we test whether stronger credit constraints and lower financial development are associated with lower technology transfers, us-ing firm-level data across 17 countries. ∗We thank Thierry Verdier for helpful comments and suggestions. Contacts