Technological Modernization as a First-Order Driver of Competitiveness in Transition Economy Electrotechnical Industries: Panel Evidence from Uzbekistan

This study examines the mechanisms through which technological modernization and innovation capacity influence the competitiveness of electrotechnical industry enterprises in Uzbekistan, a lower-middle-income transition economy. Drawing on panel data from 150 enterprises over the period 2018–2023, the study employs Partial Least Squares Structural Equation Modeling (PLS-SEM) and Levinsohn-Petrin total factor productivity (TFP) estimation to test a sequencing hypothesis: that in below-threshold transition economies, technological modernization constitutes the dominant first-order predictor of firm-level competitiveness, whereas innovation capacity becomes statistically significant only after a baseline modernization threshold has been crossed. Results confirm that technological modernization (β = 0.487, p < 0.001) exerts the strongest direct effect on the competitiveness composite, while innovation capacity fails to reach conventional significance (β = 0.139, p = 0.062) for the full sample. Subgroup analysis reveals that innovation capacity becomes a significant predictor (β = 0.312, p = 0.004) exclusively among firms that have surpassed the modernization threshold. Human capital partially mediates the modernization–competitiveness path, and institutional support moderates this relationship. The findings carry implications for industrial policy sequencing in post-Soviet manufacturing economies and contribute to the evolutionary economics literature on technological catch-up.