Abstract
This paper examines the impact of trade-related R&D spillovers on medium-high-technology-intensive (MHT) capital goods exports across 29 OECD countries from 2010 to 2017. It argues that capital goods imports facilitate technological diffusion, driving knowledge transfer and innovation that enhance industrial competitiveness. Machinery and equipment, including machinery and equipment n.e.c. that encompass Industry 4.0 capital goods, shape technological capabilities and trade performance. An augmented gravity model is employed, incorporating trade-related R&D spillovers as a key explanatory variable. The ICT Development Index (IDI) assesses digital infrastructure’s role in absorptive capacity, while standard gravity variables (GDP, distance, contiguity, and common language) capture general knowledge spillovers. Industrial capabilities are measured through these variables, with industrial drivers shaping technological capacity and infrastructural enablers supporting adoption. To address endogeneity, IV-GMM estimation is applied. Findings confirm that trade-related R&D spillovers positively influence MHT capital goods exports, highlighting R&D investment’s role in sustaining industrial competitiveness and innovation-driven trade growth.