This paper focuses on explaining how technological capabilities interact
with trade and GVCs participation to foster upgrading. We analyse trade
performance of 74 developing countries in 2000 and 2010 from a
perspective of learning, to understand what variables account for
technological diversification over time when countries trade, including
through GVCs. We find that technological capabilities not only condition
the initial determination of local firms in trade and GVCs, but they
also determine the extent to which local firms in developing countries
manage to leverage knowledge flows and move into activities of greater
technological complexity from a dynamic perspective. Our results point
to the critical role of national learning variables in countries'
performance over time. While emerging economies have synergistic
relationships between variables that explain technological capabilities
and their trade and GVC performance, this is not the case for developing
countries as whole in our sample.
Keywords: Trade, global value chains (GVCs), technological capabilities, learning, developing countries, least developed countries (LDCs), structural change, diversification, policy.
JEL Classification: F14, L14, L16, L23, O14, O19, O25, O31, O33, O43