Firm Productivity, Innovation and Financial Development
AbstractHow do firm-specific actions-in particular, innovation-affect firm productivity? And what is the role of the financial sector in facilitating higher productivity? Using a rich firm-level dataset, we find that innovation is crucial for firm performance as it directly and measurably increases productivity. Moreover, its effects on productivity are mediated through the financial sector; firms reap the maximum benefits from innovation in countries with well-developed financial sectors. This effect is particularly important for firms in high-tech sectors, which typically have higher external financing needs.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/49.
Date of creation: 01 Feb 2010
Date of revision:
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Postal: International Monetary Fund, Washington, DC USA
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Other versions of this item:
- Era Dabla-Norris & Erasmus K. Kersting & Geneviève Verdier, 2012. "Firm Productivity, Innovation, and Financial Development," Southern Economic Journal, Southern Economic Association, vol. 79(2), pages 422-449, October.
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- G1 - Financial Economics - - General Financial Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-28 (All new papers)
- NEP-EFF-2010-03-28 (Efficiency & Productivity)
- NEP-INO-2010-03-28 (Innovation)
- NEP-SBM-2010-03-28 (Small Business Management)
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