Technology gap, catching-up and outward orientation: Analysis of 63 countries

This paper examines the determinants of technological catching-up across 63 countries over the period 1982-2000 using a two staged approach. In the first stage, a measure of the technology gap between countries and the global technology frontier is computed. A positive growth of this measure is interpreted as technological catching-up. In the second stage, technology gap and technological catching-up are regressed against trade openness, FDI inflows and FDI outflows, domestic R&D, and human capital. Two main findings emerge. First, technologically backward countries catch-up faster. Second, FDI inflows, trade openness and human capital have positive effects on closing the technology gap.