Specialization patterns in trade and technology.

This thesis focuses on the hypothesis of increasing returns and path-dependence in technological development, which originates in the supposedly localised nature of external economies from knowledge creation, and looks at its implications in the innovation literature and in recent models of endogenous technological change, specialization and growth. Chapter 1 provides an empirical assessment of the hypothesis of increasing returns and path-dependence. A recontracting process formalises the idea that in the presence of strong national externaIities a country's pattern of technological specialization tends to polarise towards extreme values thus leading to the emergence of a bimodal distribution. This prediction is found to be at variance with the data. However, reinforcing effects appear to be at work in situations of strong disadvantage. This might be the effect of scarce past research experience limiting countries' ability to absorb external knowledge. The analysis of Chapter 1 is further developed in Chapter 2, where differences across technological fields are accounted for, to allow for the possibility that only some of them may be subject to increasing returns. Chapter 3 compares technology and trade specialization patterns for a group of advanced countries. The analysis shows that their relationship is weak: this weakens the case for self-reinforcing mechanisms in technological change leading to persistence in trade patterns. Chapter 4 finds that the elasticity of innovation to international spillovers is positive and significant, thus suggesting they may be an important force leading to mobility in technology and trade specialization patterns. Absorptive capacity positively affects the elasticity to spillovers, but its effect depends on the position of the country with respect to the world technological frontier: the larger the gap of a country with the technological leaders, the lower is its ability to absorb and exploit external knowledge, but the larger is its potential to increase this ability