Research and development,human capital and trade performance in technology-intensive manufactures: A cross-country analysis

Abstract

This paper comprises an extensive examination of the relationship between commonly utilized policy indicators of national technological capability and observed trade success in technology-intensive manufactures, across 52 countries, in the 1980s. A central focus is the relative performance of policy indicators which directly measure innovative activity (such as patent output and expenditure and employed scientists and engineers in R&D) versus those measuring general efforts at increasing national levels of human capital. The study design is guided by the inter-country, intrasectoral approach outlined by Dosi et al. [19] — it emphasizes differences in trade performance based on the notion of international competitiveness (but also compares results for conventional revealed comparative advantage indices). The large number of countries included, and the nature of the policy objectives adopted, have necessitated a highly aggregated approach using nation-wide attributes and trade in one broad technologyintensive sector as the measure of demonstrated international competitiveness. Simple correlation and multiple regression techniques are used to assess the association of four main sets of national attributes (indicators of direct innovative activity, general human capital development, physical capital formation and natural resource endowment) with technology-intensive trade performance.The empirical findings provide further support for the importance of national differences in technological capability as a determinant of structural, and international, competitiveness within the technology-intensive sector of production. They suggest that policy indicators measuring actual innovative activity and physical capital formation have a much closer link to technology-intensive trade than the general educational effort or output indicators. “Demand-side” measures -which proxy the actual employment and application of resources for R&D purposes — demonstrate the strength of association required for reliable policy evaluation of real national differences in technological capability. The poor performance of the general human capital supply variables highlights the need for a careful consideration of the optimality of the allocation of substantial levels of scarce national resources to broad-based educational output. A number of other significant results concerning the link between technology indicators, technology-intensive trade and economic performance are discussed.