Leader-Follower vs. Neck-to-Neck: Competition and Technological Status Across Bolivian Industries

How does competition shape technological dispersion in developing economies with persistent structural rigidities? Drawing on the Schumpeterian step-by-step framework, this paper studies whether competitive pressure is associated with convergence toward the technological frontier or with the persistence of leader-follower structures. Using firm-level data from Bolivia’s 2017 Survey of Medium and Large Enterprises, we relate industry-level competition to firms’ Total Factor Productivity gaps within two-digit industries. Greater competition is systematically associated with smaller gaps, consistent with catch-up incentives. Yet the distribution of technological positions reveals that most markets operate under leader-follower configurations. Heterogeneity across firm size and sectors further indicates that technological dispersion is unevenly distributed across the industrial landscape. These findings provide a structural characterization of how competition interacts with technological asymmetries in a commodity-dependent economy, highlighting the role of market configuration in shaping innovation incentives.