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Product and process innovation and firms' decision to export

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  • Ilke Van Beveren
  • Hylke Vandenbussche

Abstract

We analyze the relationship between firm‐level innovation activities and firms' propensity to start exporting for firms in a small open economy. We measure innovation by innovative effort (R&D) as well as by innovative output (product and process innovation). After carefully correcting for endogeneity and selection issues, the evidence points to firms self‐selecting into innovation in anticipation of their entry into export markets, rather than product and process innovation triggering entry into the export market. These results suggest that governments can foster firm‐level innovation through trade liberalization.

Suggested Citation

  • Ilke Van Beveren & Hylke Vandenbussche, 2010. "Product and process innovation and firms' decision to export," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(1), pages 3-24.
  • Handle: RePEc:taf:jecprf:v:13:y:2010:i:1:p:3-24
    DOI: 10.1080/17487870903546267
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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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