The cost of technology licensing and the transfer of technology

The paper analyses the role of technology licensing in the industrial devel opment of poor countries and the degree to which the prices they pay for te chnology agreements are excessive. It is argued that in the early stages of industrial development, licensing agreements in industrially advanced sect ors are not relevant to the bulk of poor countries. As countries enter into more advanced sectors, technology licensing agreements become more importa nt. 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.