From innovation to exporting or vice versa? Causal link between innovation activity and exporting in Slovenian microdata

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From innovation to exporting or vice versa? Causal link between innovation activity and exporting in Slovenian microdata

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Joze P. Damijan
Crt Kostevc
Saso Polanec

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Abstract

Firm productivity and export decision are closely related to its innovation ac- tivity. Product innovation may play a more important role in the decision to start exporting, while the decision for process innovation may be triggered by success- ful exporting. This suggests that the causality between innovation and exporting may run from product innovation to exporting and conesequently from exporting to process innovation and reverse productivity improvements. Using detailed mi- crodata, including innovation survey, industrial production survey and information on trade, for Slovenian firms in 1996-2002 we investigate this dual causal relation- ship between firms' innovation and exporting activity. We find no evidence for the hypothesis that either product or process innovations increase the probability of becoming a first time exporter, but find consistent support both in the innovation survey as well as in the industrial production survey that exporting does lead to pro- ductivity improvements. These, however, are likely to be related to process rather than product innovations and are limited to a sample of medium and large sized first time exporters only.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, K.U.Leuven in its series LICOS Discussion Papers with number 20408.

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Date of creation: 2008
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Handle: RePEc:lic:licosd:20408

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-04-21 (All new papers)
NEP-EFF-2008-04-21 (Efficiency & Productivity)
NEP-ENT-2008-04-21 (Entrepreneurship)
NEP-INO-2008-04-21 (Innovation)
NEP-INT-2008-04-21 (International Trade)
NEP-MIC-2008-04-21 (Microeconomics)

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Ilke Van Beveren & Hylke Vandenbussche, 2009. "Product and Process Innovation and the Decision to Export: Firm-level Evidence for Belgium," LICOS Discussion Papers 24709, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
Andersson, Martin & Lööf, Hans, 2008. "Learning-by-Exporting Revisited - the role of intensity and persistence," Working Paper Series in Economics and Institutions of Innovation 149, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]

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