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Making one’s own way: jumping ahead in the capability space and exporting among Indian firms

Author

Listed:
  • Marco Grazzi

    (Università Cattolica del Sacro Cuore)

  • Nanditha Mathew

    (UNU-MERIT
    IBIMET-National Research Council
    Scuola Superiore Sant’Anna)

  • Daniele Moschella

    (Scuola Superiore Sant’Anna)

Abstract

This paper provides large scale evidence on the determinants of international competitiveness of Indian manufacturing firms, focusing in particular on the role of technology, costs and imported intermediate inputs. Our evidence suggests that innovation, in particular R&D investment, is positively related to both firms’ probability to export and firms’ export volumes. We also find that imported intermediate inputs, incorporating foreign technology is strongly associated with expanding export activities of firms. Finally, and in contrast to much of previous evidence on developed economies, we find that higher productivity or lower unit labour costs are not systematically associated with the probability to enter export markets, but they are positively related to higher export volumes. Overall our results point to the existence of a pattern of involvement in international trade for firms in developing countries that is not relying as a main driver on cost competitiveness.

Suggested Citation

  • Marco Grazzi & Nanditha Mathew & Daniele Moschella, 2021. "Making one’s own way: jumping ahead in the capability space and exporting among Indian firms," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 931-957, July.
  • Handle: RePEc:spr:joevec:v:31:y:2021:i:3:d:10.1007_s00191-020-00718-z
    DOI: 10.1007/s00191-020-00718-z
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    More about this item

    Keywords

    Innovation; Firms’ capabilities; Imported inputs; Productivity sorting; Trade policy; India;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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