Exports of High Technology Products from Developing Countries: Is it Real or a Statistical Artifact

60 Pages·2000·0.3 MB·English

Discussion Paper Series
#2001
Exports of High Technology Products from Developing
Countries: Is it Real or a Statistical Artifact
Sunil Mani
May 2000
United Nations University, Institute for New Technologies, Keizer Karelplein 19, 6211 TC Maastricht, The Netherlands
Tel: (31) (43) 350 6300, Fax: (31) (43) 350 6399, e-mail: [email protected], URL: http://www.intech.unu.edu

EXPORTS OF HIGH TECHNOLOGY PRODUCTS FROM
DEVELOPING COUNTRIES:
*
IS IT REAL OR A STATISTICAL ARTIFACT ?
Sunil Mani
UNU/INTECH Discussion Papers
ISSN 1564-8370
Copyright © 2000 The United Nations University, Institute for New Technologies,
UNU/INTECH
UNU/INTECH discussion papers intend to disseminate preliminary results of the research
carried out at the institute to attract comments

* This paper is based on a UNU/INTECH research project , Project 99431-1. Thanks are due to Noi
Kwanjai for excellent research assistance. I am also grateful to comments made by participants of an
internal seminar at UNU/INTECH and another seminar at the Institute of Social Studies, The Hague and
especially to Shulin Gu and Larry Rausch Also grateful thanks to Lynn Mytelka, Sanjaya Lall, Thomas
Hatzichronoglou, Ashok Desai and Jeffrey James for their comments on an earlier draft. However none of
them are responsible for any errors that may still remain.

ABSTRACT
This paper first develops a consistent time-series data on the exports of high technology
products from essentially the developing countries. An analysis of the data shows that
developing countries are increasingly becoming exporters of manufactured products as against
primary products in the past. Second the world trade is increasingly becoming a trade in high
tech products. What is more striking is the significant increase of the technology content of
exports by developing countries: very nearly a quarter of the exports from developing countries
is now in high tech products. Third, the share of developing countries in high tech exports have
shown dramatic increases: it has increased from about 8 per cent in 1988 to about 23 per cent by
1997. But there is considerable concentration of it in a few countries. The paper then seeks to
explain whether these developing countries are real exporters of high tech products or not. This
is accomplished by a careful examination of the degree of product specialisation by both
developed and developing countries, by examining their record with respect to patenting and
finally by analysing certain indicators of high tech competitiveness. The paper concludes by
presenting a case study of a leading high tech exporter from the developing world.
Key Words: Exports; High-technology; Innovation; Developing Countries; Competitiveness
JEL classification: N70, O34, O38, O53

CONTENTS
1. INTRODUCTION 9
2. EXPORTS OF MANUFACTURES FROM DEVELOPING COUNTRIES 11
3. CHANGING TECHNOLOGICAL COMPLEXION OF WORLD TRADE IN
MANUFACTURES 15
3.1 DEFINITION OF HIGH TECHNOLOGY 16
3.2 EMPIRICAL RESULTS 19
4. MAIN FEATURES OF HIGH TECHNOLOGY EXPORTS 25
4. 1 CONCENTRATION OF HIGH TECH EXPORTS: 25
4.2 THE CATCHING UP OF DEVELOPING COUNTRIES 27
4.3 COMPETITIVENESS OF HIGH-TECH EXPORTS 29
4.4 NET EXPORT RATIO 31
5. VERIFICATION OF THE STATISTICAL ARTIFACT HYPOTHESIS 33
5. 1 PRODUCT SPECIALISATION BETWEEN DEVELOPED AND DEVELOPING COUNTRIES 35
5. 2 PATENTING RECORD OF DEVELOPING COUNTRIES 38
5. 3 INDICATORS OF HIGH TECH COMPETITIVENESS 45
6. CASE STUDY OF A LEADING EXPORTER FROM THE DEVELOPING WORLD 47
ROLE OF INNOVATION POLICIES 47
ROLE OF INDUSTRIAL POLICIES 51
7. SUMMING UP 53
REFERENCES 55
ANNEXURE 1 57
THE UNU/INTECH DISCUSSION PAPER SERIES 59

1. INTRODUCTION
In the literature on economic growth, which is ever burgeoning, one of the most important
issues is the growth performance of a handful of East Asian countries. These countries have
earned a reputation, despite the recent financial crisis, for being one of the fastest growing
regions of not only the developing world but also of the world itself. Despite the recent
preoccupation with the debate on the sources of growth of these countries, what is relatively less
known is the contribution of their national systems of innovation to certain dimensions of their
economic performance such as their export performance. Given the fact that exports are an
important engine of growth and industrial competitiveness, it is important to analyse the
contribution of technology to achieving a fast and sustained growth in exports and especially
manufactured exports. Recent studies have shown that the location of export production is
changing from the industrialised to developing countries and exports by the latter have grown
rapidly and diversified away from traditional resource and labour-intensive products to high
technology manufacture (Lall, S, 1998). But this has remained concentrated in a handful of
countries. The precise reasons as to how these countries have emerged as exporters of high-
technology manufactures and to what extent their domestic innovative activities have
contributed to this performance needs to researched into.
The study is structured into six sections. First we analyse the changing structure of the world
exports of manufactures and the place of developing countries in it. Second we develop a
consistent and rigorous series of data on the exports of high technology products from
developing countries. This is accomplished by applying the OECD definition of high
technology to the COMTRADE database available on-line from the UN Statistics Division.
Employing the data series thus developed, we measure the changing technological complexion
of world exports of manufactured products. This part will also have a detailed discussion on the
various datasets that are available for such a measurement. The third section focuses on
discussing three main features of the exports of high technology products from developing
countries. Thy are the concentration of high tech exports from developing countries in five
countries or so; the catching up of developing countries; and the competitiveness of high tech
exports both at the country level and within each country at the product levels. In the fourth
section we attempt at a verification of the “statistical artifact” hypothesis. Three separate
indicators are used for verifying the hypothesis. First, we analyse the product specialisation
between both developed and developing countries as well. Second, we analyse the patenting
9
record of the developing countries especially with respect to high technology areas. Third, we
analyse certain summary indicators of high tech competitiveness. Finally in the sixth section we
analyse the case of the largest exporter of high tech products from the developing world.
It is no longer correct to classify all developing countries as a homogenous category, especially
in terms of their respective technological development. Since the quantum and composition of a
country’s exports is considered to be one of the best indicators of technological development,
we use export performance as a way of classifying the developing countries. Before doing so, I
present some general features with respect to the trade performance of developing countries. In
terms of S&T, only fifty countries in the world are active. In 1994, 98 per cent of the world
R&D spending, 95 per cent of the total number of scientists and engineers employed in the
world and 99 per cent of the patents issued (by both the US and European Patent Offices) were
from these fifty countries1. The fifty countries comprise of a very heterogeneous group. It
includes all the developed countries, the majority of the newly industrialised countries, and a
proportion of the developing countries and countries in transition. These fifty countries, on an
average, have an economic growth rate, which is very much higher than the remaining 130
countries. It shows that between 1986 and 1994, the growth rate of the fifty countries was 2.4
percent, or about three times higher than that of the rest of the world. Countries lacking the
human capital to make effective use of their natural resources, productive systems or imported
capital goods do less than those which have no natural resources, but which do have educated
populations, knowledge and know-how.
2.41
2.5
2
1.5
Percentages 0.86
1
0.5
0
Rest of the World 50 Leading Countries
Figure 1: Economic Growth of the 50 S&T leading Countries in a comparative Perspective
(Annual average 1986-1994)
Source: European Commission (1997)

1 See Annexure 1 for a full list of the fifty countries.
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