Competitiveness, Technology Licensing, and Ease of Paying Taxes: A 30-Country Study

Abstract

Objective: The objective of this article is to explore the impact of a regulatory constraint: the ease of paying taxes, on the likelihood of technology licensing and the subsequent impact on the sales of firms acquiring such licences across 30 countries. Research Design & Methods: In a comparative, longitudinal study design we apply random effects panel logit, and random-effects GLS regression models. The World Bank Enterprise Surveys panel data for Central Europe for 2008 to 2013 is the source data for the analysis. Surveys of firms from 30 countries in Central and Eastern Europe and Central Asia constitute the panel. Findings: Increasing regulatory burden in the form of tax compliance reduces the likelihood of technology licensing. Technology licensing has only modest effects on sales. Foreign ownership of firms increases both the likelihood of technology licensing and revenues. Implications & Recommendations: All manner of political entities, from towns to entire nations, revise their tax policies to woo investment. Our current analysis of the marginal effects suggests that the impact of these improvements is underwhelming. Attracting foreign ownership is recommended to increase technology licensing, sales and competitiveness. Contribution & Value Added: While tax holidays are a common device to woo investment, the interaction of tax regimes with technology licensing, specifically the regulatory burden of preparing and paying taxes, is scarcely studied. It is a gap we strive to fill in this manuscript.

Keywords

• competitiveness
• technology transfer
• licensing
• ease of paying taxes
• stages of economic development
• international business