In a historical context, international trade theories have two separable views to export composition as a driver of comparative advantage in developing nations. Traditional “Capacity Base Approach” assumes a competitive international technology market, that firms in developing countries can find, select, buy and transfer the technologies they need without any additional costs, so in this approach, technological activates plays no role in the comparative advantage of developing countries and main determinant is relative factor endowments. But in “Capability Base Approach” comparative advantage depends more on the national ability to master and use technologies than on factor endowments. In this approach, market failures cause finding technologies be a difficult, often costly, process and once technology is imported, its efficient use requires creating new skills and knowledge to master its tacit knowledge. Different export structures in capability base approach have different implications for growth and effects on domestic industrial development but emphasizes that export structures are not flexible in short time periods. This paper maps out “Feder” Neoclassical growth model for testing effects of IRAN non-oil export technological composition, because this conventional functional form make possible separate export sub sector without using their production factor endowments. After converting “Harmonized Commodity Description and Coding System (HS)” to “International Standard Industrial Classification (ISIC)” and after converting ISIC codes to five “High”, “Medium- High”, “Medium-low”, “Low” and “Non-Technological” Codes, for 69 seasonal periods (1992Q2 to 2009Q2) by using simple and generalized lease squaretechniques, results show that there is a factor productivity differential in technological-intensive subsectors and emphasizes the role of low technological industries in economic growth of IRAN’s economy.
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