The effect of technological intensity on international trade

Abstract

This paper aims to show the impact of technological intensity (R&D intensity) on trade. Using a detailed product-level dataset of 118 countries from 1988 to 2006 and the Poisson pseudo-maximum-likelihood (PPML) estimator, this paper provides robust evidence that technological intensity promotes exports mainly through increasing the variety of exports. More specifically, a 1-percentage point increase in the country’s technological intensity promotes the variety of exported products by around 0.12% on average across all 15 sectors. In addition, total exports and the variety of exported products increase are higher in technology-intensive sectors.