This
paper
examines
the
microfoundations
of
the
determinants
of
international
competitiveness.
It
does
so
within
the
broader
“technology
gap”
perspective
whereby
wide
technological
and
organizational
dif-
ferences
ultimately
shape
the
patterns
of
trade
within
sectors
across
countries
and
their
dynamics.
First,
we
take
stock
of
the
incumbent
evidence
on
the
relation
between
cost-related
and
technological
com-
petition
at
country
and
sectoral
level.
The
overall
picture
indeed
suggests
that
the
countries’
sectoral
market
shares
are
mainly
shaped
by
technological
factors
while
cost
advantages/disadvantages
do
not
seem
to
play
any
significant
role.
But
within
any
sector,
within
any
country,
firms
widely
differ.
Hence
the
question:
does
this
property
apply
also
at
a
micro
level?
Here,
we
first
propose
a
heuristic
model
based
on
a
generalized
Polya
urn
process
yielding
such
a
property
and,
then,
empirically
attempt
to
identify
the
underlying
dynamics
at
the
firm
level
using
a
large
panel
of
Italian
firms,
over
nearly
two
decades.
Results
show
that
also
at
micro
level
in
most
sectors
investments
and
patents
correlate
positively
both
with
the
probability
of
being
an
exporter
and
with
the
capacity
to
acquire
and
to
increase
exports,
whereas
labour
costs
show
a
negative
effect
only
in
some
sectors.
The
result
is
reinforced
when
separating
the
short-
and
long-run
effects,
highlighting
the
predominant
impact
of
technological
proxies
and
basically
the
irrelevance
of
wage
costs
This
paper
examines
the
microfoundations
of
the
determinants
of
international
competitiveness.
It
does
so
within
the
broader
“technology
gap”
perspective
whereby
wide
technological
and
organizational
dif-
ferences
ultimately
shape
the
patterns
of
trade
within
sectors
across
countries
and
their
dynamics.
First,
we
take
stock
of
the
incumbent
evidence
on
the
relation
between
cost-related
and
technological
com-
petition
at
country
and
sectoral
level.
The
overall
picture
indeed
suggests
that
the
countries'
sectoral
market
shares
are
mainly
shaped
by
technological
factors
while
cost
advantages/disadvantages
do
not
seem
to
play
any
significant
role.
But
within
any
sector,
within
any
country,
firms
widely
differ.
Hence
the
question:
does
this
property
apply
also
at
a
micro
level?
Here,
we
first
propose
a
heuristic
model
based
on
a
generalized
Polya
urn
process
yielding
such
a
property
and,
then,
empirically
attempt
to
identify
the
underlying
dynamics
at
the
firm
level
using
a
large
panel
of
Italian
firms,
over
nearly
two
decades.
Results
show
that
also
at
micro
level
in
most
sectors
investments
and
patents
correlate
positively
both
with
the
probability
of
being
an
exporter
and
with
the
capacity
to
acquire
and
to
increase
exports,
whereas
labour
costs
show
a
negative
effect
only
in
some
sectors.
The
result
is
reinforced
when
separating
the
short-
and
long-run
effects,
highlighting
the
predominant
impact
of
technological
proxies
and
basically
the
irrelevance
of
wage
costs
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