Abstract
A positive relationship exists between national technological size and technological diversification across fields of innovative activity. This paper shows how the nature of this relationship has changed historically. There has been a downward structural shift in the cross-country size-diversification frontier since 1965—for any given size countries have become less diversified or more narrowly concentrated in their technological specialisation. One explanation is that international technology sourcing by MNEs has led locations to focus on what they do best. A supporting factor may be a rise in technological interrelatedness, which encourages focus upon a specific selection of complementary combinations.