The Role of Technology and Competitiveness Policies: A Technology Gap Approach

Over the last two decades, a great number of studies have focused on the explanation of trade performance based on technological factors, including various studies on technology gaps. The aim of the present paper is to extend this empirical approach to include some additional factors including the role of policies, considered here as part of the explanation together with the traditional cost and technology variables. In this vain, the analysis is carried out for countries’ trade performance differentiating by foreign markets. It is expected that traditional variables included in previous technology gap analysis and variables expressive of policies will have different effects on the countries’ trade performance when different markets are considered. Empirical tests are made for the trade performance of a set of European countries—namely Spain, France, the UK and Italy—during the time period from 1987 to 1997.