How do countries shift their export specialization? The role of technological capabilities and industrial policy in Ireland, Spain and Sweden (1995–2018)

Abstract

This article contributes to the Comparative Political Economy discourse on countries’ export specialization transitions. While current growth model literature often highlights producer coalitions’ influence, we present a complementary perspective emphasizing industrial policies. These policies, we argue, are not solely shaped by politics but are also deeply influenced by sectoral technological capabilities. By strategically engaging in both demand and supply-side sectoral innovation processes, industrial policies deepen existing technological capabilities with spillover effects into new sectors or foster new sector-specific capabilities. Our empirical analysis comprises two main steps. First, we create export profiles for eight European nations, using OECD TiVA data from 1995 to 2018. These profiles are categorized based on their technological and innovation content. Second, we identify significant shifts in export structures within Ireland, Sweden and Spain. Through thorough case studies, we illustrate the role of industrial policies in cultivating sector-specific technological capabilities.