The paper explores firstly the impact of technological change on trade growth at the country level,
using trade statistics and statistics on patenting activity in the US, across 20 countries for 17
manufacturing sectors. Secondly, using structural decomposition analysis, the paper examine
whether the degree to which countries get access to sectors with above average growth in
technological opportunity has any impact on growth in aggregate market shares of exports. The
results demonstrate that there is a positive relationship between change in trade performance and
change in technological capabilities across countries for 8 ‘technology intensive’ sectors over the
period 1965-1988. It is also shown that there appear to be some (however weak) relationship
between the degree to which countries get access to sectors with above average growth in
technological opportunity and growth in aggregate market shares. However, there seems to be a
much stronger positive relationship between growth rates in trade performance and the individual
‘national innovation system’s’ ability to actively move into technological sectors offering above
average technological opportunity.