import-led innovation

abstract: the austrian textile industry responded to massive foreign competition which mainly came from other industrialized countries with the introduction of more efficient and advanced production techniques as well as with improving product quality and design. the introduction of technical progress has helped the industry to meet foreign competition successfully. technical advance in the austrian textile industry was dominated by two specific features. it was imported from abroad while own research activities played only a minor role. the import-led growth strategy persued by the austrian textile industry seems to have been economically successful because of the following reasons. first, economic models on international diffusion of technology suggest that the impact of diffusion on the growth-rate of productivity will be the greatest in industries with medium-sized relative technological gaps. accordingly, with an elasticity between .39 and .15 the austrian textile industry was able to achieve a significant part of its productivity-growth by the import of foreign best practice technology, which was of about the same size as the impact of capital deepening. furthermore, econometric stability tests of the estimated relationshipseem to indicate that the productivity gains obtained by the strategy have increased in the 1970s which might be a possible explanation for the shift that has taken place towards importing technical progress instead of producing it at home. second, the import of foreign process innovations has helped the industry to meet international price competition by making improvements in product quality possible thereby lowering the export price elasticity for textile products.;