THE ROLE OF TECHNOLOGY IN MARKET SHARES DYNAMICS

The paper presents the estimation of an empirical model of market share dynamics for five industralized countries and 18 industries. The emphasis is put on the importance of non-price factors of competitiveness, whereas most traditional explanations rest on the influence of relative prices. Among the former type of factor, the role of variables reflecting technological advantage is privileged. In particular, the role of innovations has received considerable attention in the literature on international trade as well as the literature on endogenous growth. In this spirit, the paper introduces patent counts and investment as explanatory variables for the export-market share. The results show that non-price variables have an important impact on the determination of long-run competitiveness.