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Trade, productivity, and innovation: Firm-level evidence from Malaysian manufacturing

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  • Lee, Cassey

Abstract

This study attempts to explore the relationships between trade, productivity and innovation using firm-level data from three innovation surveys covering the period 1997-2004. It is found that the link between exporting and productivity is a weak one in Malaysia. Productivity is driven mainly by capital intensity and human capital but this may not necessarily translate into export dynamism. Innovation, whether it is product or process innovation, is likely to be the key driver in exporting. Exporters are likely to be larger firms with foreign ownership. There is some evidence that trade liberalization may promote exports especially for non-innovating firms. The main policy implication of the findings from this study is that policy makers should focus on enhancing innovation capabilities to ensure export dynamism. There is a need to also consider policies to enhance productivity improvements in sectors with export potential. Policy makers should additionally examine the possibility of lowering tariff levels in industries with relatively lower incidence of innovating but with high export potential. More attention should also be paid to providing a conducive environment for small domestic firms to innovate and venture into exporting.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 22 (2011)
Issue (Month): 4 (August)
Pages: 284-294

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Handle: RePEc:eee:asieco:v:22:y:2011:i:4:p:284-294

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Web page: http://www.elsevier.com/locate/asieco

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Keywords: Trade Productivity Innovation;

References

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  1. Bee Yan Aw & Mark J. Roberts & Tor Winston, 2007. "Export Market Participation, Investments in R&D and Worker Training, and the Evolution of Firm Productivity," The World Economy, Wiley Blackwell, vol. 30(1), pages 83-104, 01.
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  3. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development.
  4. Mahadevan, Renuka, 2007. "Perspiration versus inspiration: Lessons from a rapidly developing economy," Journal of Asian Economics, Elsevier, vol. 18(2), pages 331-347, April.
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  7. Howard Pack, 1994. "Endogenous Growth Theory: Intellectual Appeal and Empirical Shortcomings," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 55-72, Winter.
  8. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
  9. Wolfgang Keller, 2001. "International Technology Diffusion," NBER Working Papers 8573, National Bureau of Economic Research, Inc.
  10. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  11. Baldwin, John R., 2004. "Trade Liberalization: Export-market Participation, Productivity Growth and Innovation," Economic Analysis (EA) Research Paper Series 2004027e, Statistics Canada, Analytical Studies Branch.
  12. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
  13. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
  14. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  15. David Greenaway & Richard Anthony Kneller, 2004. "New Perspectives on the Benefits of Exporting," Economie Internationale, CEPII research center, issue 100, pages 99-110.
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Cited by:
  1. Waheed, Abdul, 2011. "Innovation and firm-level productivity: econometric evidence from Bangladesh and Pakistan," MERIT Working Papers 061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Esther Goya & Esther Vayá & Jordi Suriñach, 2011. "Productivity and innovation spillovers: Micro evidence from Spain," IREA Working Papers 201126, University of Barcelona, Research Institute of Applied Economics, revised Dec 2011.
  3. Esther Goya & Esther Vayá & Jordi Suriñach, 2012. "“Do intra- and inter-industry spillovers matter? CDM model estimates for Spain”," IREA Working Papers 201214, University of Barcelona, Research Institute of Applied Economics, revised Sep 2012.
  4. Jinjarak, Yothin & Mutuc, Paulo Jose & Wignaraja, Ganeshan, 2014. "Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms," ADBI Working Papers 470, Asian Development Bank Institute.

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