Specialized technology suppliers, international spillovers and investment:evidence from the chemical industry

in this paper we study how the development of specialized upstream technolo gy suppliers in leading countries improves technology access and lowers inv estment casts far downstream firms in follower countries. We test this idea using a novel database covering all investments in chemical plants in less developed countries (LDCs) during the 1980s. We find that investments in c hemical plants in the LDCs are greater, the greater is the number of techno logy suppliers that operate in the first world, A major contribution of thi s paper is to identify an important but understudied mechanism through whic h technology is made available. (C) 2001 Elsevier Science B.V. All rights r eserved.