Highlights :

• Study the role of trade liberalization and democratization for technology adoption
• Use panel data on technology adoption for 1980-2000 at the sector level
• Exploit within-country variation & timing of institutional changes
• Trade Openness and Democratization are complementary for technology adoption
• Openness may hamper technology adoption if not coupled with democratization

 Abstract :
We study the role of trade liberalization, democratization and their interaction for technology adoption. A general equilibrium theory with heterogeneous skills predicts a complementarity between trade and political regimes. Openness should accelerate technology adoption if coupled with democratization but may lead to a slowdown if these regime changes are imbalanced. We use panel data on technology adoption at the sectoral level for the period 1980-2000. We exploit within country variation and the heterogenous timing of openness and democratization. The results document the existence of a positive interaction between these institutional changes for technology adoption.

 Keywords : Trade Openness | Democratization | Political Economy theory | Technology Adoption | Sector Level Data | Cross-Country Analysis

 JEL : F16, J24, O14, P51, F59