Drivers of Export Upgrading

Summary. — This paper analyses the determinants of export upgrading using a cross-country panel dataset over the 1992–2006 period. The results suggest that the export sophistication of countries is enhanced by capital deepening, engagement in knowledge creation, transfers via investment in education and R&D and foreign direct investment and imports. Institutional quality also facilitates the export upgrading of countries. The effect of natural resources on the structural upgrading of exports appears to be complex and mixed and is dependent upon the type of resources involved. The effects of these determinants vary between low, middle, and high income country groups.