HIGH-TECHNOLOGY EXPORTS AND ECONOMIC FREEDOM: NEW INSIGHTS FOR THE TOP HIGH-TECH EXPORTERS

Recent literature emphasizes that if export composition consists mostly of high-tech exports, increasing international competitiveness encourages the production of high-value-added goods and supports productivity enhancements within the country. This study aims to contribute by analyzing this literature by examining the effect of economic freedom, its sub-components, and interactions on high-tech exports for top high-tech exporters by focusing R&D. We calculated the average of high-tech exports from 2009-2023 and then selected the countries whose average high-tech exports are at least the world average. Our analysis reveals two important findings: (i) The aggregated Economic Freedom Index (EFI) and its sub-components—namely, regulatory efficiency, market openness, and the rule of law—have positive and statistically significant effects on HTE. (ii) While R&D and EFI individually contribute positively to HTE, their interaction often yields a counterintuitive negative effect. This suggests that the positive impact of R&D on export performance may be constrained or diluted in highly liberalized institutional settings. Therefore, we provide important implications for policy makers.