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International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms

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  • Joachim Wagner

Abstract

Using a knowledge production framework and a rich set of plant level data this study demonstrates that in Germany firms that are active on international markets as exporters or foreign direct investors do generate more new knowledge than firms which sell on the national market only. These differences are not only due to a larger firm size, or different industries, or the use of more researchers in these firms, but due to the fact these globally engaged firms learn more from external sources, too. The importance of these knowledge sources varies with the type of innovation. These results, which are broadly in line with the findings of a recent study using UK firm level data, can help to explain the strong positive correlation between productivity and international activities of firms. Firms that are active on markets beyond the national borders generate higher levels of new knowledge that feed into higher productivity.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2006-15.

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Length: 30 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:esi:egpdis:2006-15

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Keywords: Exports; foreign direct investment; knowledge production function; Germany;

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References

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  1. Joachim Wagner, 2005. "Exports, Foreign Direct Investment, and Productivity: Evidence from German Firm Level Data," International Trade 0504006, EconWPA.
  2. repec:rus:hseeco:122439 is not listed on IDEAS
  3. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec..
  4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  5. Joachim Wagner, 2006. "Export Intensity and Plant Characteristics: What Can We Learn from Quantile Regression?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(1), pages 195-203, April.
  6. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
  7. Bernard, A. & Wagner, J., 1996. "Exports and Success in German Manufacturing," Working papers 96-10, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
  9. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  10. Arnold, Jens Matthias & Hussinger, Katrin, 2004. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-level Analysis," ZEW Discussion Papers 04-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Jens M. Arnold & Katrin Hussinger, 2010. "Exports versus FDI in German Manufacturing: Firm Performance and Participation in International Markets," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 595-606, 09.
  12. Chiara Criscuolo & Jonathan E. Haskel & Matthew J. Slaughter, 2005. "Global Engagement and the Innovation Activities of Firms," NBER Working Papers 11479, National Bureau of Economic Research, Inc.
  13. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, vol. 77(2), pages 287-292, October.
  14. Slavtchev, Viktor & Fritsch, Michael, 2005. "The Role of Regional Knowledge Sources for Innovation: An Empirical Assessment," Freiberg Working Papers 2005,15, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  15. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  16. Joachim Wagner, 2005. "Exports and Productivity: A survey of the evidence from firm level data," Working Paper Series in Economics 4, University of Lüneburg, Institute of Economics.
  17. repec:fth:harver:1473 is not listed on IDEAS
  18. Michael Fritsch & Viktor Slavtchev, 2005. "The Role of Regional Knowledge for Innovation," ERSA conference papers ersa05p623, European Regional Science Association.
  19. Daniel S. Hamermesh, 2000. "The Craft of labormetrics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
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