Catching Up or Falling Behind
Chapter 3: Catching up or Falling Behind Hypothesis II: Trade Competitiveness on Exports by Technology Levels between the Leader and Followers
3 Catching up or falling behind hypothesis II: trade competitiveness on exports by technology levels between the leader and followers To analyze the role of technology on trade structures, it is necessary to decompose manufactured exports by levels of production technology. The three-digit Standard International Trade Classification (SITC) product code is generally considered to be one of the best measurement units of an industry’s characteristics. Combining the common approach of distinguishing export commodities by “resource-based, labor-intensive, scale-intensive, differentiated and science-based manufactures” with the Organisation for Economic Co-operation and Development (OECD) approach of classifying “technological activity within each category” of product groups, Lall (2000) classified the technological structure of exports into nine categories. Based on the three-digit SITC (revision 2), Lall (2000) classified all trading commodities other than primary products into nine groups, which include two categories of resource-based manufactures (RB1 and 2) and seven categories of different levels of technological intensity, from low level 1 and 2 (LT1, LT2) through medium level 1, 2, and 3 (MT1, MT2, MT3) to high level 1 and 2 (HT1, HT2). Lall’s (2000) classification of export commodities has the advantage of differentiating product characteristics in accordance with both their production technology as well as their factor endowment. This fulfills the purpose of synthesizing the technology and factor proportions theories in this study. The coverage of these nine product groups based on three-digit SITC is reported in Appendix A3.1. 3.1 THE CHANGING COMPOSITION OF EXPORT COMMODITIES It would be interesting to examine the changing composition...
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