The evolution of technological inequalities: country effect vs industry composition

Purpose - Using the EU‐KLEMS database for 12 countries and 16 industries, the purpose of this paper is to analyze the differences in technological capital intensity (R&D capital stock as a percentage of GVA) between industries and the evolution of inequalities between the EU‐11 and the USA, as well as between EU countries. Design/methodology/approach - The authors use shift‐share analysis and a Theil inequality index to break down these inequalities and to quantify the importance of either a country or a specialization effect. Findings - Results from the shift‐share analysis show that there was a technological gap in favor of the USA until the mid‐1990s linked to the greater accumulation of technological capital in most of the productive sectors considered, this being the main reason for the differences in technological innovation between the USA and the EU‐11. However, since 1995 a change in productive specialization has occurred, with a significant drop in the weight of lower technology‐intensive industries in the EU‐11 economy, as well as a significant drop in the weight of some medium technology‐intensive industries in the USA, accounting for the reduction in the technological gap between the EU and the USA. Results from the Theil index show that the differences in the productive structure of European countries explain most of their differences in technological capital intensity. Originality/value - The study discusses the issue from the standpoint of the distribution of technological innovation across industries. The variable analyzed and constructed is R&D capital stock and not R&D expenditures. It applies a methodology (shift‐share analysis and Theil index) not commonly used to analyze technological innovation inequalities.