Is China Catching Up? Technological Sophistication of Chinese Exports to European Union

Increases in the technological sophistication of some emerging econo-mies, linked, in part, to shifts in the distribution of innovation activities from developedto emerging economies has attracted a lot of attention. Whether emerging economieswill catch up with developed regions in terms of innovation and technology remains anopen question. Various methods can be used to measure the technological capacity ofan economy, though most suffer from a number of signifi cant problems. In this paper,I present a relatively new measure of a country’s technological sophistication based uponthe goods that it exports. The empirical analysis focuses on exports to the European Unionover the period 1990–2009. Special attention is paid to China, which has made a hugeprogress in technology and innovations in the past years. Based on this analysis, China’stechnological capabilities correspond with its income level and thus China does not seemto threaten the technological position of the EU yet.