There is a growing interest in understanding the links among innovation, high-tech international trade and overall economic performance. This is mostly due to the fact that international trade of high-technology goods provides information about overall competitiveness and the position of an economy within the technology global market. It also contributes for the understanding of how innovation affect both absolute and comparative advantages on a dynamic economic environment and of the relative importance of high-technology on the international marketplace. However, questions like the following are still open to debate: does openness impact high-tech exports? Is labor skills a major source of comparative advantage in the global high-tech market? Does capital abundance impact high-tech trade flows? What is the role of institutions in explaining the supply of high-tech exports?
Objectives and methods
This paper aims to contribute for the understanding of the questions above by developing a simple theoretical framework linking high-tech exports to its proximate determinants and by using panel data econometrics to identify the major factors influencing high-tech exports. Regression analysis is performed using a panel dataset from 1980 to 2008 compiled using data from the World Bank World Development Indicators (WDI), Barro and Lee (2000) and Polity IV Project.
Conclusion
This research finds evidence that human capital, inflows of foreign direct investments, and openness to international trade are the major factors impacting the performance of a country's high-tech industry in the global market. It also shows that political institutions impacts high-tech exports indirectly via its effects on proximate factors (human capital and inflows of foreign direct investments). This paper also demonstrates that gross capital formation, savings and macroeconomic volatility have no significant effect on high-tech exports. Finally, net migration is associated with increased high-tech exports.
JEL codes: F41- Open Economy Macroeconomics; F14 - Country and Industry Studies of Trade
Focus: Macro