Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 65: Technology and Trade - an analysis of technology specialization and export flows

Martin Andersson () and Olof Ejermo ()
Additional contact information
Martin Andersson: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Olof Ejermo: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: Centre for Innovation, Research and Competence in the Learning Economy (CIRCLE), Lund University. Address: CIRCLE, Lund University, P.O. Box 117, SE-221 00 Lund, Sweden , Sweden

Abstract: This paper examines how technology specialization, measured by citations-weighted patents, affects trade flows. The paper analyzes (i) the relationship between technology specialization and export specialization across regions and (ii) how the technology specialization of origin and destination affect the size and structure of link-specific export flows. We find that the export specialization of a region typically corresponds to the region’s technology specialization, which supports the view that comparative advantages can be created by investments in technology and knowledge. Export flows from regions to destination countries with similar technology specialization as the origin regions consist of commodities of higher quality in the specific technology, as indicated by higher prices. Highly specialized regions export more and charge higher prices. The results of the paper suggest that an understanding of trade ultimately requires an understanding of the spatial pattern of investments in (and creation of) technology and knowledge, as such investments shape export specialization patterns and the corresponding composition of export flows between locations across space.

Keywords: exports; technology; knowledge; specialization; quality; patents

JEL-codes: F14; O33; O52; R12

26 pages, May 11, 2006

Note: Revised version accepted for publication in "Economics of Innovation and New Technology"

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