Impact of technological development on national competitiveness: empirical evidence from developing countries

Purpose This paper aims to shed light on the impact of technological development on the competitiveness of 38 developing countries. These countries are experiencing rapid growth and have the potential to transition to a high-income level. However, the impact of technological development on national competitiveness is not the same when classified by region, such as in the case of Asian and American countries. This paper explores how technological development influences national competitiveness. Furthermore, the empirical results have been compared and analyzed to evaluate the effects and the different levels of impact of the independent variables on the dependent variable in Asian and American countries, thereby proposing appropriate policy implications. Design/methodology/approach The econometric models are developed based on Porter’s Diamond Model. This study uses the Generalized Method of Moments for regression analysis, using a data set covering the period from 2005 to 2022. Findings The study’s findings provide valuable insights into the competitiveness of different groups of countries, highlighting both similarities and differences in their development trajectories influenced by technological factors. Control variables, created by merging of technological factors and other independent variables, are used in the models to identify how the impact changes when technological factors are combined with other variables affecting national competitiveness. The results unveil that technology development has positive effects on national competitiveness, not only directly by itself but also indirectly through interactions with other variables. Practical implications Technological development is a long-term national strategy and is essential for sustaining and improving national competitiveness. Investment in technology should be diversified, funding from public, private and foreign sources. Governments should prioritize and promote key areas such as basic research, research and development, innovation and patent creation, as well as technology transfer activities. Originality/value This paper highlights the critical role of technological development in strengthening national competitiveness. Unlike previous studies, it unveils that the positive impact of technology development on competitiveness is robust not only in direct ways but also indirectly through interactive effects. Based on the findings, policy recommendations are provided to help countries enhance competitiveness, productivity and achieve fast growth in the future.