The aim of this study is to examine the impact of governance indicators, innovation, per capita GDP, tariff rates, and oil rents on medium- and high-tech exports in 37 developing countries over the period 2000–2023. Quantile regression is employed to analyze the data and determine the effects of variables across different quantiles of technology exports. The results indicate that government effectiveness has a positive and significant effect on technology exports, with the impact being stronger in higher quantiles, while rule of law has a negative and significant effect, which intensifies across higher quantiles. Innovation indicators, including R&D expenditures and the number of technicians employed in R&D, also have positive and significant effects on technology exports, although their impact diminishes in higher quantiles and becomes insignificant in the top quantile. Moreover, per capita GDP has a positive effect in most quantiles but becomes insignificant in the top quantile, while tariff rates and oil rents negatively affect technology exports, being significant in higher and lower quantiles, respectively. Based on these findings, enhancing government effectiveness, targeted investment in R&D, increasing skilled human resources, reducing trade barriers, and decreasing dependence on natural resources are suggested as key policies for promoting technology exports in developing countries. These findings highlight the importance of efficient governance, innovation, and economic resource management in developing technological capacities and increasing export competitiveness.
Purpose/Aims:
Technological innovation and the development of medium- and high-tech exports are among the most important drivers of sustainable growth and enhanced competitiveness in the global economy. Since the 1950s, it has been emphasized that long-term growth cannot be achieved solely through the accumulation of capital and labor, but rather through innovation and technological progress that play a decisive role in productivity enhancement. Countries that have successfully expanded their technological capacity have not only established knowledge-based industries but also secured larger shares of global markets. In developing countries, which often rely on primary exports, this issue is even more crucial, as the expansion of technological exports reflects the ability to transform knowledge into high value-added products.
Nevertheless, most previous studies have mainly focused on conventional economic variables such as foreign direct investment or trade openness, while institutional and governance factors have received less attention. However, governance quality can significantly influence the path of innovation and technological exports. Government effectiveness, by creating institutional capacity and efficient policymaking, promotes innovation, while in some cases, strict enforcement of laws may constrain flexibility and innovative activities. On the other hand, innovation indicators such as R&D expenditures and the number of R&D technicians reflect the core capacity of countries in producing and commercializing complex technologies. This study employs panel quantile regression, a method that, unlike traditional approaches, does not limit the analysis to the mean effects but examines the impact of variables across different quantiles of the technological export distribution, thus capturing cross-country heterogeneity more accurately. Accordingly, this research investigates the role of governance and innovation in promoting medium- and high-tech exports in 37 developing countries during 2000–2023.
Methodology & Framework:
This study uses panel data for 37 selected developing countries over the period 2000–2023. The dependent variable is the share of medium- and high-tech exports (MHTE) in total industrial exports. The independent variables include government effectiveness (GOVR) and rule of law (RULR) as governance indicators, R&D expenditure (RD) and the number of R&D technicians (TRD) as innovation indicators, as well as GDP per capita (GDPP), tariff rate (TARIFF), and oil rents (OILR) as control variables. Data were obtained from the World Bank. To analyze the effects, the study applied panel quantile regression, which makes it possible to assess the impact of explanatory variables across different quantiles of the technological export distribution.
Findings:
The results show that government effectiveness has a positive and significant impact on medium- and high-tech exports, with a stronger effect in higher quantiles. This indicates that countries with higher levels of government effectiveness benefit more in the upper segments of the technological export distribution, as efficient policymaking, institutional stability, and support for economic activities enhance export capacity. In contrast, the rule of law exhibits a negative and significant effect, which becomes stronger across higher quantiles, suggesting that stricter legal constraints and compliance costs may reduce firms’ flexibility and innovative activities in countries with higher levels of technological exports.
Regarding innovation, R&D expenditure has a strong and positive effect in lower quantiles, implying that at early stages of technological development, increased R&D investment directly promotes technological exports. However, this effect diminishes and becomes insignificant in higher quantiles, indicating that at more advanced stages, R&D spending alone is insufficient unless accompanied by appropriate institutional and policy support. The number of R&D technicians shows a positive and significant effect across most quantiles, although its magnitude declines in higher quantiles, suggesting that the contribution of specialized human capital decreases beyond a certain threshold.
GDP per capita has a positive and significant effect in middle quantiles, reflecting the role of economic growth and higher income levels in facilitating technological exports. However, this effect weakens and becomes negative in higher quantiles, possibly due to a shift toward domestic consumption or non-export-oriented activities. Tariff rates negatively affect technological exports, with stronger effects in higher quantiles, indicating that trade restrictions hinder access to advanced technologies and inputs. Oil rents also have a negative impact, mainly significant in lower quantiles, suggesting that dependence on oil revenues reduces incentives and capacity for innovation-driven and technology-based exports.
Discussion:
The findings indicate that the development of medium- and high-tech exports depends on both institutional and economic factors. Government effectiveness plays an important role in providing the institutional environment necessary for supporting technological exports, while strict legal constraints may limit firms’ flexibility and innovative activities, particularly in countries with higher levels of technological exports.
The results related to innovation suggest that the role of R&D investment and specialized human capital varies across stages of technological development. These factors are more effective in the early stages, while at higher levels of technological exports, their impact becomes more limited and requires complementary institutional and policy conditions. In addition, macroeconomic and trade-related factors highlight the importance of economic structure and trade policies in shaping technological export performance.
Conclusion & Implications:
Overall, the results suggest that promoting medium- and high-tech exports in developing countries requires strengthening government effectiveness and creating an appropriate institutional environment for innovation. Investment in R&D and the development of specialized human capital are particularly effective at early stages of technological development, but at more advanced stages they should be complemented by institutional reforms and trade policies aimed at reducing tariff barriers. Furthermore, economic diversification and reducing dependence on oil rents are essential conditions for advancing technological exports in developing countries.