Files
Abstract
This paper examines developing countries’ ability to increase output capacity in order to
become competitive in international trade while fostering market diversification by
investing in a portfolio of industries instead of specializing in one industry. Measuring
the impact that information and communication technology (ICT) has on competitiveness
in the export market, I examine the applied research question: does investment in ICT
infrastructure stimulate export trade in intellectual property, specifically, in the area of
copyright related goods and services? The motivation for this research is twofold: 1) the
growing digital divide between developed and developing countries needs to be
addressed for development and prosperity; and 2) the growing number of industries
impacted by ICT (as measured by the number of industries that have sales related to ICT)
meets the goal of diversifying developing economies. If I find that returns to ICT are the
same in both developed and developing countries and the gap in ICT related trade is due
to endowments of ICT, this supports the Heckscher-Olin model’s theoretical predictions
on patterns of trade. However, if I find that returns to ICT are different between
developed and developing countries and that the ICT related gap in trade is not due to
endowments of ICT, this supports the Ricardian model’s theoretical predictions on
patterns of trade. Most likely the analysis will find evidence that supports a combination
of these two trade models. That being the case I would need a theory that can weigh the
relative effects of endowments against returns to technology. I utilize the Blinder (1973)
and Oaxaca (1973) decomposition methodology to disentangle the combined effects of
endowments and technology on development and patterns of trade.