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image for OpenScout resource :: THE IMPORTANCE OF TECHNOLOGY

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This paper introduces inter-sectoral technology-based linkages (or technologicalspillovers) in a empirical model of international market share dynamics. The Pavitttaxonomy is applied as a yardstick for interpreting the empirical results. In accordancewith the criteria behind the taxonomy, we find upstream linkages to be moreimportant for the determination of market shares in scale intensive and supplierdominated sectors, while downstream linkages are particularly important forspecialised suppliers. We also find investment to be more important for scaleintensive types of sectors, formal R&D for science based sectors, and costs forsupplier dominated sectors. The results highlight that the relative importance ofdifferent sources of competitiveness differs across sectors and thus reconcile thedifferences in emphasis in relation to the role of technology in determining tradeflows, between (a) a tradition that stresses the importance of knowledge developed ina particular sector, and (b) the so-called ‘home market hypothesis’, that points outhow inter-sectoral linkages within a particular country determine trade flows from thatcountry.

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Keld Laursen

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