Technological change, technological catch-up and export orientation: evidence from Latin American Countries

Abstract

The paper examines in a nonparametric frontier framework the effect of exports on Latin American countries’ technological change and technological catch-up levels over the period 1950–2014. Based on the probabilistic approach of nonparametric production efficiency measurement, we apply time-dependent conditional full and partial efficiency estimators to evaluate countries’ export orientation policies over the examined period. The results reveal that the effect of countries’ export activity on their technological change and technological catch-up levels is nonlinear. Overall our findings suggest that up to a certain point, lower export shares enhance countries’ technological catch-up levels. The results also reveal that higher export shares affect positively their technological change levels. Finally, in a second stage analysis we apply a location-scale regression model in order to estimate the idiosyncratic part of the estimated production efficiencies. This measure is a proxy of Solow’s residual accounting for aggregate effects of other factors not included in our estimation.