Exporting through technological capability: econometric evidence from India's pharmaceutical and electrical/electronics firms

Abstract

Contrary to conventional wisdom based on the product cycle and technology gap models, this paper argues that the technology factor can prove to be a key determinant of manufactured exports from less-developed countries (LDCs). The technological advantages enjoyed by LDCs rest on a very different foundation, technological capability, rather than on major technological advancements or breakthroughs. This paper attempts to capture and analyse how technological capability augments export competitiveness of LDC enterprises by introducing quantifiable concepts of technological capability and estimating econometric models of firm-level export performance for two R&D-intensive industries in India, pharmaceuticals and electronics/electricals. The results of our econometric analysis provide new insights into the relationship between technological capability and export performance, highlighting significant inter-industry differences. We find that simple production engineering capabilities augment exports of both sectors, while efficiency of reverse engineering proves to be particularly important for pharmaceutical exports only.

Foreign ownership, technological capabilities and clothing exports in Sri Lanka

“…One of the fastest growing strands of literature has focused on the relationship between firm-level export performance, foreign ownership, and the acquisition of technological capabilities. This literature has been empirically led through case studies and econometric analysis, with contributions including Lall (1986Lall ( , 1987 on India, Kumar and Siddharthan (1994) on India, Bhaduri and Ray (2004) on India, Wilmore (1992) on Brazil, Pietrobelli (1997) on Chile, Westphal et al (1990) on Thailand, Ernst et al (1998) on East Asia, Rasiah (2003Rasiah ( , 2006 on Malaysia and South Africa, Deraniyagala and Semboja (1999on Tanzania, Wignaraja (1998, 2002 on Sri Lanka and Mauritius, and Rasiah (2004) on Africa, Asia, and Latin America.…”

FDI and Innovation as Drivers of Export Behaviour: Firm-Level Evidence from East Asia

“…As firms with experience are regarded as enjoying greater experimental and tacit knowledge, age is considered to be positively associated with the probability of exporting and the building capabilities (van Dijk, 2002;Rasiah, 2003;Bhaduri and Ray, 2004).…”

“…The process technology index and the other four 8 variables were significant. In a study of Indian pharmaceuticals and electrical/electronics firms, Bhaduri and Ray (2004) used an output-based measure of R&D capability (e.g., new products developed, technical reports published, development of new designs and processes). R&D capability, foreign ownership, and raw material imports were all significant.…”

“…It has generally emerged that the characteristics of firms that export are significantly different from firms that do not. Specifically, exporting firms are larger, have higher foreign equity and are more innovative than non-exporters (for a recent selection see Bleaney and Wakelin, 2002;Barrios et al 2003;Bhaduri and Ray, 2004;Raisah, 2004;Correa et al, 2007). These findings from studies on developed and developing countries have been rationalised in terms of the neoHeckscher-Ohlin Model, the neotechnology theories, the technological capabilities approach and the national innovation systems approach, among others.…”

Do Exporting Firms in the People’s Republic of China Innovate?

“…The process TI and the other four variables were significant. In a study of Indian pharmaceuticals and electrical/electronics firms, Bhaduri and Ray (2004) used an output-based measure of R&D capability (new products developed, technical reports published, and development of new designs and processes). R&D capability, foreign ownership, and raw material imports were all significant.…”