Technology, resource endowments and international competitiveness

The paper evaluates the impact of technology together with resource endowments, factor prices and economies of scale on international competitiveness in OECD countries. Knowledge capital stocks are obtained by cumulating R&D expenditure. Results show that competitiveness is determined not only by the R&D activity of the representative firm, but also by total R&D in the domestic industry as well as economywide stocks of knowledge, indicating the presence of local externalities. Competitiveness is also affected by factor prices and resource endowments as well as scale economies and learning by doing. Further results point to the importance of economies of scale in R&D internal to the firm, of the degree of openness for the capacity to utilize global spillovers and of investment for introduction of embodied technical progress. Finally, the R&D impact is higher in high- and medium- than in low-tech industries. (C) 1999 Elsevier Science B.V. All rights reserved.