Technology Gap Approach To A Dynamic Change In World Machine Tool Markets: A Panel Data Analysis

Abstract

This paper applies the technology-gap trade theory to explaining radical changes in the competitive positions of countries in world machine tool markets over the last three decades. It develops the notion that the innovation gaps in machine tools among countries led to the intercountry differences in the competitive performance in the sector as well as in its user sectors. Since competitive advantage largely depends on a capability to improve, create and apply technology to market competition, a higher innovative performance in one country than another is closely related to a higher export performance. A higher innovative performance in machine tools is also associated with a higher competitive performance of the large areas of its user sectors, due to sectoral interdependences and externalities generated by machine tool innovations. The results of empirical investigation through a panel data analysis show that the international gaps in machine tool innovations appeared to have a positive significant relationship with the differences in the export performance of both the machine tool sector and its user sector across countries.Technology gap, Machine tools, Competitiveness, Innovativeness, Sectoral interdependence, Dynamic fixed effect, Panel data analysis, User sector, Cross-country analysis JEL Classification: L64, 033, C33,

Is There a Smart Sustainability Transition in Manufacturing? Tracking Externalities in Machine Tools over Three Decades

“…The mature sector of machine tools has thus far been mainly conceptualized as a regional [30,84] or national innovation system [25,31,32] or studied on the firm level [84,85]. Based on multiple data sources (as in the present paper), Chen et al [9] provide an analysis of the evolution of the machine tool sector from the viewpoint of funding and topical networks, although without embedding it in a theoretical framework, as is done here against the backdrop of the TIS approach, and without exploring externalities.…”

“…A rather conservative industry with tight margins is thus put under transformative pressure [1] to make a double transition which is both smart and sustainable. Having played a strategic role in industrialization, especially in the United States [24], the state of the machine tools industry continues to serve as an indicator of the state of national innovation in industrial engineering [25] as well as of the state of global manufacturing at large, for which it is critical [26]. Rather than conducting a study of manufacturing in general, which would cloud sector differences, the machine tools industry was chosen for this paper due to its being a "bellwether of manufacturing acumen" [26] (p. 143) which indicates shifts in countries' competitiveness in manufacturing in a timely manner.…”