Increase Versus Transformation Of Exports Through Technological And Institutional Innovation: Evidence From Bayesian Model Averaging

International trade has been studied for decades; still, some debates remain, and new questions emerge as the structure and growth drivers of the (global) economy change. While it has been settled that price factors no longer explain international trade flows, there seems no consensus about the importance of other factors. Using data for 28 EU countries over the period 1995-2017, we examine various determinants of different types of manufactures' exports. We discover two types of impact on export performance: a direct impact on overall exports and an indirect, transformational impact (from less to more technologically advanced exports). Our results thus explain differences in previous findings related to the importance of technological factors for exports. We show that patenting has the direct positive impact on exports, while R&D has the positive transformational impact. In general, most technological and institutional factors have either the direct or indirect impact on exports.