The role of productive and technological capabilities in export dynamics in developing countries

Productive and technological capabilities are major engines of export. But how they affect export behaviour at the microeconomic level is less clear and many questions remain. This paper empirically investigates their role in export dynamics in 40 developing countries. The analysis shows that, within sectors, countries with greater productive capacities have more exporters, and the exporters are larger and charge higher prices for their products. The results also confirm a positive relationship between technological capabilities and diversification: within sectors, exporters in countries with stronger capabilities tend to export a higher number of products and to more destination markets. Lastly, technological capabilities also play a specific role in the diversification of products and market destinations of high-technology sectors. Thus, even comparing exporters’ behaviour only among developing countries, productive and technological capabilities are found to be strongly related to the extensive and intensive margins of exports, and to diversification and product quality.