Technology, resource endowments and international competitiveness

Abstract

This paper attempts to evaluate the role of technology in combination with resource endowments and economies of scale as determinants of industrial patterns of comparative advantage, international competitiveness and specialization within manufacturing among OECD countries. Thus we attempt to combine two paradigms from trade theory, namely the technology or Ricardian view, and the factor proportions or Heckscher-Ohlin explanations of changes in trade patterns.Within the large empirical literature on the determinants of patterns of comparative advantage and specialization (for surveys see Deardorff 1984 andLeamer 1994), most studies treat the role of factor endowments. Technology has been introduced into the empirical analysis of comparative advantage in various ways. Early studies used relative labor productivity data (MacDougall 1951(MacDougall , 1952 to explain countries' specialization.Other studies found R&D intensity, in addition to a set of factor proportions variables, to be positively related to US export performance (Gruber, Metha & Vernon 1967, Stern & Maskus 1981. Variables like product age or income elasticity have been used (Wells 1969, Hufbauer 1970, Finger 1975 to proxy various aspects of technology.Introducing R&D intensity as a product characteristic, as in these studies, implies that R&D capacity is treated as just another resource. A more satisfactory approach, based on Posner's (1961) concept of technology gaps, is to explain competitiveness in terms of UHODWLYH R&D intensity, where high values are assumed to result in better products and/or more efficient methods. On the macro level, differences in national R&D activity has been shown to influence export growth, i.e. DEVROXWH advantage, more than traditional measures of price competitiveness (Fagerberg 1988).There is a growing literature on the role of technology for FRPSDUDWLYH advantage or UHODWLYH international competitiveness, measured on the industry level by (gross) exports, export shares, revealed comparative advantage or net export shares of consumption (for a survey see Verspagen & Wakelin 1996). These studies use different proxies for technology. While R&D expenditure measures the input of resources in the

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