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

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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.

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Notes

  1. In their study Badunenko et al. (2013) provide evidence of a negative effect of technological catch-up, whereas, technological change was not a determinant behind countries’ growth of labor productivity.

  2. The choice of these basic macroeconomic inputs/output (i.e., aggregated production function) has been made in the spirit of minimizing potential dimensionality problem (Dyson et al. 2001; Wilson 2018; Charles et al. 2019) in a yearly basis. However, since our sample covers the duration from 1950 to 2014 the total number of observations used in our analysis is 1040.

  3. For interesting applications of the probabilistic framework of efficiency measurement see the studies by De Witte and Marques (2011), Roudaut and Vanhems (2012), Zschille (2015) and Cordero et al. (2017).

  4. For the latest advances on smoothing techniques and bandwidth selection see Bădin et al. (2019).

  5. Based on the bootstrap algorithms introduced by Kneip et al. (2016), Simar et al. (2018) developed a procedure in order to test the separability assumption. Following Huiban et al. (2018) we have applied the test for the first year, the median year and the last year of our study (i.e., for 1950, 1982 and 2014). Based on the estimated p-values for all cases we formally reject the separability assumption for the share of exports.

  6. However, It must be highlighted that the examined effect could be different for different values of inputs due to possible interactions (Mastromarco and Simar 2017). These interactions can been visualized by examine the behavior of the ratios for fixed levels of inputs.

  7. For relevant applications using location-scale regression models see the studies conducted by Huiban et al. (2018) and Mastromarco and Simar (2018).

  8. In this case inefficiency is indicated with values ‘<1’ whereas, efficiency with values ‘=1’.

  9. By following Daraio and Simar (2014, p. 365) we apply a bootstrapped based significance test (Racine 1997) in order to evaluate the significance of time and exports on the estimated ratios. We apply the test setting α = 0.5 and α = 0.99 in order to test the significance of the variables on countries’ technological catch-up and technological change levels. In all cases the null hypothesis (no effect of time and export) is rejected at the 0.01 level.

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Acknowledgements

I would like to thank the Associate Editor and the anonymous reviewers for their useful and constructive comments. Any remaining errors are solely the author’s responsibility.

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  1. Department of Economics, University of Thessaly, 38333, Volos, Greece

    Nickolaos G. Tzeremes

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Tzeremes, N.G. Technological change, technological catch-up and export orientation: evidence from Latin American Countries. J Prod Anal 52, 85–100 (2019). https://doi.org/10.1007/s11123-019-00566-5

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