Can exports be used as an indicator of technological capabilities of countries?

Abstract

During the past 30 years, many emerging economies, especially China, have strengthened their technological and innovative capabilities. Have these countries started to threaten the position of traditional technological leaders? This paper examines whether technological capabilities of an economy can be evaluated based on the goods each economy exports (EXPY). Detailed product classification of exports to the EU in the period between 1984 and 2009 form the underlying data. Further, other data and studies are used to assess the reliability of EXPY. Results show that many emerging economies have significantly increased their technological sophistication; among them exports of Mexico, the Philippines and Malaysia are technologically the most sophisticated. These economies have significant share of foreign value added embodied in exports, though. Therefore, EXPY based on gross exports is not a reliable indicator of technological capabilities of countries and this indicator needs to be combined with other data.