ABSTRACT
The chapter examines export product diversification and technological capability. Export product diversification is measured by the Herfindahl‒Hirschman product diversification index while technological competence is represented by several indicators such as manufacturing value added, researchers’ density, R&D expenditure density, patent application filed, and Global Innovation Index. The univariate analysis suggests that countries that had a low technological base in 1990 and remained with the same technological competence even after three decades, witnessed product contraction rather than diversification. On the other hand, the countries that had a high technological base three decades ago and continued with the same, witnessed product specialisation. The countries that improved technological competence in three decades experienced product diversification depending on the extent of such improvement.
Findings of multivariate analysis substantiate the results of univariate analysis. Several African countries did not improve in technological competence for the last three decades leading to product contraction in international markets. On the other hand, most of the Asian sample countries continuously developed their technological competence and succeeded in export product diversification. The chapter concludes that a critical success factor for diversification is the acquisition of technological competence. African countries have fallen far behind in export competitiveness in large part due to their lack of industrial technological capability.
