ABSTRACT
Technology (i.e. knowledge of the design, production and sale of products, processes, systems and services) is recognised as an important — even the most important — ingredient of the international competitiveness of high-wage countries. It has been incorporated into the mainstream theory of international trade as ‘human capital’. It has also been the basis of the so-called ‘neo-technology’ theories of international trade, which make more realistic micro-assumptions about firm behaviour, with Schumpeterian processes of innovation (i.e. the development and commercialisation of products and processes, giving innovating firms a temporary monopoly advantage over competitors) and of imitation (i.e. the adoption and adaptation of innovations by these competitors) playing a central role. 1 In addition, as we shall see in the penultimate section of this chapter, it has been given a central role in certain theories of international investment.
