The economic performance of countries is defined as an assessment for a country of its success in global markets related to its knowledge base, innovative capabilities and overall market strength. Technological diversification is considered as one of the factors of economic growth. Therefore, the article investigates the extent to which technological diversification affects economic development and how capabilities approach economic performance of a country. Technological diversification is a phenomenon that extends a firm's technology base into a wide range of technology fields. Whereas previous studies have provided insights into the connection between technological diversification and firms' performance, little is known about the influence of technological diversification on countries' innovative performance and trends. The purpose of the paper is to examine the relationship among technological diversification and economic performance at country level. A heuristic framework for depicting how a country's capability interacts with its economic growth is proposed in this study to contribute to technology and innovation management.