| This study deals with the nature and determinants of, and technological capabilities underlying, capital goods exports from the advanced developing countries. By analyzing trade patterns and technology content of individual commodity groups, the study tests a number of present hypotheses concerning the dynamic comparative advantage.; The study shows that capital goods exports have performed better than manufactured exports and that capital goods are directed largely to developing countries at the initial stages of exporting activity but become oriented more toward industrial countries over time, generally a period of three to four years. It is also shown that success in production and export of capital goods is not achieved through an overly restrictive regime.; If capital goods production and exports are subject to learning externalities, and if innovation (reflected in research and development expenditure and skills) leads to lower costs and/or higher quality, then one would expect to detect a rising technology/skill intensity of the bundle of capital goods exports. Accordingly, the study tests the hypotheses that the bundle of capital goods exported to developing countries is initially more technology/skills intensive than that exported to industrial countries, but the gap diminishes in later years; that capital goods exports in general become more technology/skill intensive over time; and that capital goods exports represent greater amounts of technology and skill than manufactured exports as a whole. With some qualifications concerning policies governing industry, technology, and trade in developing countries, these hypotheses are supported. It is argued that inappropriate policies lead to temporary competitiveness in a set of products that has little change of capturing or maintaining foreign markets.; The determinants of capital goods exports, based on various trade theories, are examined. It is suggested that the success of these exports may not be explained by traditional trade theory. Skills, minor technological effort, and scale economies are significant influences on such trade patterns. In particular, the impact of these factors is pronounced in exports to developing countries, and only later, if at all, the factors become important explanations of South-North trade in capital goods. |
