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R&D, Innovation and Exporting

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  • Richard Harris
  • John Moffat

Abstract

This study considers the determinants of whether a firm exports, undertakes R&D and/or innovates, and, in particular, the contemporaneous links between these variables using three waves of the UK Community Innovation Survey (CIS). Where appropriate, an instrumental variables procedure is employed to overcome problems of endogeneity. The results show that in both manufacturing and services, being involved in exporting increased the probability that an establishment was engaged in spending on R&D. Spending on R&D in manufacturing had a much larger impact on the probability of exporting which implies that spending on R&D was not simply to boost the probability of producing new goods and services, but also to improve the establishment's knowledge assets which would in turn help it break down barriers to international markets. In non-manufacturing, spending on R&D increased the probability of innovating but had no significant impact on whether the establishment exported; rather, innovating increased the probability of exporting. Exporting had no direct impact on whether innovation occurred in either sector. Given the key role of R&D, innovation and exporting in determining productivity, it is important that government understands these complex interactions between R&D, innovation and exporting and takes advantage of them when devising and implementing productivity-enhancing policies at the micro-level.

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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0073.

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Date of creation: Mar 2011
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Handle: RePEc:cep:sercdp:0073

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Keywords: R&D; innovation; exporting; endogeneity;

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Cited by:
  1. Christopher F Baum & Mustafa Caglayan & Oleksandr Talavera, 2012. "R&D Expenditures and Geographical Sales Diversification," Boston College Working Papers in Economics 794, Boston College Department of Economics, revised 12 Nov 2012.
  2. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
  3. Lööf, Hans & Nabavi, Pardis, 2013. "Learning and Productivity of Swedish Exporting Firms: The importance of Innovation Efforts and the Geography of Innovation," Working Paper Series in Economics and Institutions of Innovation 296, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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