An Exploration of Factors Shaping Technology-Upgrading Efforts in Mozambican Manufacturing Firms

This paper presents an analysis of factors shaping technology-upgrading efforts in the Mozambican manufacturing sector. It uses firm-level data to examine these issues for the metalworking and light chemicals sectors, using Logit regression analysis to identify factors associated with firms’ decisions to engage in technology-upgrading efforts in three areas: (i) product development; (ii) production technology development aimed at upgrading existing equipment or purchasing entirely new manufacturing technologies; (iii) and process engineering. In line with much of the literature on industrial organization and the microeconomics of technology change, this paper finds that existing production and technological conditions in manufacturing firms do play an important role in shaping their technological efforts. However, this association is not always linear, cumulative or uniform across the various relevant spheres of manufacturing, underscoring the multifaceted nature of technology change at this level. Moreover, factors identified in the literature as being instrumental in shaping technology development efforts, such as skills or foreign ownership, play no role in dynamics of this kind in Mozambique. At the same time, other factors that have received less attention, such as the ability of firms to engage in technology cooperation arrangements or the role played by demand and market conditions appear as important factors shaping these technology-upgrading efforts. Altogether, these findings serve to underscore the importance of defining policy interventions for private sector development that go beyond investment climate concerns and take into account issues such as the promotion of linkages, technology cooperation and demand/market management considerations.