DOI: 10.1007/s00191-003-0162-z J Evol Econ (2003) 13: 411–434 c  Springer-Verlag 2003 Exploring factors affecting international technological specialization: the role of knowledge flows and the structure of innovative activity ⋆ Franco Malerba 1 and Fabio Montobbio 1,2 1 CESPRI, Universit` a L .Bocconi, Via Sarfatti 25, 20136, Milan, Italy (e-mail: franco.malerba@uni-bocconi.it) 2 Department of Economics, Universit` a degli Studi dell’Insubria, Via Ravasi 2, 21100 Varese, Italy (e-mail: fmontobbio@mail.eco.uninsubria.it) Abstract. We define international technological specialisation (ITS) as the techno- logical performance of a country in a specific technology relative to its overall inter- national technological performance. This paper uses patent applications and patent citations at the European Patent Office for five countries (US, UK, Italy, France, Germany) from 1989 to 1994 for 135 technological classes in three industrial sectors (Chemicals, Electronics and Machinery). It shows that ITS is significantly persis- tent and is affected by the direction of cross-sectoral knowledge spillovers within countries. In addition, the paper shows that the concentration of innovative activ- ities, the emergence of new innovators and technological co-operation positively affect ITS. Some differences across sectors emerge. Key words: Technological specialisation – Knowledge spillover – Market struc- ture JEL Classification: O30, L10 ⋆ We are grateful to Giorgio Rivero and Dieter Urban for valuable research assistance.We are indebted to Paul Geroski, Stefano Breschi, the participants to the Eighth International Schumpeter Conference (Manchester, 2000) and two anonymous referees and the editors of this Journal for their insightful sug- gestions. Citations data were provided to us by Bart Verspagen. The usual disclaimer applies. This paper originally developed as part of the Research Project: Sectoral Systems in Europe – Innovation, Com- petitiveness and Growth (ESSY), Third Research and Technological Framework Programme, Targeted Socio-Economic Research, TSER [Contract no: SOE1-CT 98-1116 (DG 12-SOLS)]. It has also bene- fited from The Short-term Mobility Program by Italian CNR (Prot. 031883) and from the coordinated Projects of Italian CNR. Correspondence to: F. Malerba