Climbing the ladder of technological development

Abstract

Despite being the main thriving force behind economic growth and industrial development, technological innovation remains highly concentrated on a handful of countries. It is therefore of a great interest to know how countries accumulate and develop their innovative capabilities, what kind of obstacles they need to overcome, and whether it is possible to identify opportunities to develop new areas of technological specialization. In this paper we analyze countries’ patterns of technological diversification and specialization along the development process. We provide evidence regarding the importance of existing technological capabilities and the relationship among technologies in shaping possible paths of technological development. We show that the likelihood of diversification is higher for those technologies that are related to countries’ existing profile of competences. Moreover, we show this effect to be stronger at earlier stages of development. Additionally, we show that countries tend to follow clear patterns of specialization along the development path, by moving towards more complex and valuable technologies.