Factors Transforming High-Tech Exports from OICs

Abstract

This paper intends to empirically examine how R&D expenditures, import of
intermediate inputs and scale-economies influence high-tech exports from
Organization of Islamic Countries (OICs). In this context, the study assesses
the predictions of the theories of international trade on comparative
advantage, processing trade as well as new economic geography. The paper
focuses on selected OICs that are aspiring to become technologically
advanced by diversifying their production and export base from low-end
products to high-tech products. To achieve this objective, these countries are
investing on domestic R&D activities, and making efforts to attract foreign
technologies and knowledge through imported inputs and foreign direct
investment. Besides, they are restructuring their industries to benefit from
scale-economies. Within this perspective, using the Empirical Bayesian
technique, the paper concludes that R&D expenditures positively influence
high-tech exports as predicted by traditional theories; while economies-ofscale are relatively less effective in the promotion of high-tech exports. The
variable import of electronic parts and components strongly support the
presence of a phenomenon of processing trade. Based on these findings, the
paper draws some implications for policy making to leverage high-tech
exports from OICs.