The impact of the scope of technological search on path dependence in export specialisation. Evidence for European countries

This paper examines how product relatedness and the breadth of technological search affect the path-dependent development of export specialisations across countries documented in prior research. The results of the econometric analysis in this paper show that broader technological search in an industry has a positive impact on the development of comparative advantages in the product lines it exports. The interplay between product relatedness and the scope of technological search has a two-edged character. On the one hand, broader technological search supports adjustments and consolidations of the export baskets on the extensive margin. This contributes to weaken path-dependency. On the other hand, it fosters the competitiveness of products that are related to current export specialisations, and thereby promotes path-dependency on the intensive margin of trade. These results differ across countries with different levels of technological capabilities.