Why do we need a theory and metrics of technology upgrading?

This paper discusses why we need a theory and metrics of technology upgrading. It critically reviews existing approaches to technology upgrading, and proposes a theoretically relevant and empirically grounded intermediate conceptual and statistical framework to illustrate the types of challenges facing economies with different levels of income. It conceptualises technology upgrading as a three-dimensional process that considers the intensity and type of technology upgrading based on different types of innovation and technology activities; the broadening of technology upgrading through exploitation of technology and knowledge diversification; and interaction with the global economy via the import, adoption, and exchange of knowledge. We consider these to be necessary first steps towards a theory and metrics of technology upgrading and the generation of more relevant composite indicator of technology upgrading.