IDEAS home Printed from https://ideas.repec.org/p/ecm/ausm04/200.html
   My bibliography  Save this paper

Does Innovation Cause Exports? Evidence from Exogenous Innovation Impulses and Obstacles Using German Micro Data

Author

Listed:
  • Stefan Lachenmaier; Ludger Woessmann

Abstract

Trade and growth theories predict a mutual causation of innovation and exports. We test empirically whether innovation causes exports using a uniquely rich German micro dataset. To overcome the potential endogeneity, we need to identify variations in innovations that are exogenous to export performance. Our identification strategy takes advantage of a unique micro dataset of an innovation survey of German manufacturing firms. In this survey, the firms do not only report about their innovation behavior, their export share and other relevant control variables, but also whether specific impulses furthered their innovation and whether specific obstacles hindered their innovation. By using certain innovation impulses and obstacles that are credibly exogenous to the firms’ export performance as instruments for the actual innovative activity, we can identify variations in innovations that are exogenous to exports. We argue that this instrumental variable strategy yields estimates of the causal effect of innovation on exports in an industrialized country. In this paper we use as reference models a simple OLS framework and also a Tobit model to account for the relatively high share of non-exporters. Both models are then compared with their instrumental variable counterparts, a linear two-stage least square model and an IV Tobit model. We find that innovation attributable to this variation leads to an increase of about 10 percentage points in the export share of German manufacturing firms. The evidence is robust to several alternative specifications and similar for product and process innovations.

Suggested Citation

  • Stefan Lachenmaier; Ludger Woessmann, 2004. "Does Innovation Cause Exports? Evidence from Exogenous Innovation Impulses and Obstacles Using German Micro Data," Econometric Society 2004 Australasian Meetings 200, Econometric Society.
  • Handle: RePEc:ecm:ausm04:200
    as

    Download full text from publisher

    File URL: http://repec.org/esAUSM04/up.479.1077809796.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joshua D. Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 69-85, Fall.
    2. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    3. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(1), pages 134-157, March.
    4. Simon Kuznets, 1962. "Inventive Activity: Problems of Definition and Measurement," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 19-52, National Bureau of Economic Research, Inc.
    5. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-1283, December.
    6. Newey, Whitney K., 1987. "Efficient estimation of limited dependent variable models with endogenous explanatory variables," Journal of Econometrics, Elsevier, vol. 36(3), pages 231-250, November.
    7. Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
    8. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
    9. repec:fth:harver:1473 is not listed on IDEAS
    10. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-374, June.
    11. Amemiya, Takeshi, 1978. "The Estimation of a Simultaneous Equation Generalized Probit Model," Econometrica, Econometric Society, vol. 46(5), pages 1193-1205, September.
    12. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343, National Bureau of Economic Research, Inc.
    13. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
    14. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-266, April.
    15. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    16. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    17. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    18. repec:fth:prinin:455 is not listed on IDEAS
    19. Sterlacchini, Alessandro, 1999. "Do innovative activities matter to small firms in non-R&D-intensive industries? An application to export performance," Research Policy, Elsevier, vol. 28(8), pages 819-832, November.
    20. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
    21. Basberg, Bjorn L., 1987. "Patents and the measurement of technological change: A survey of the literature," Research Policy, Elsevier, vol. 16(2-4), pages 131-141, August.
    22. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    23. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    24. Greenhalgh, Christine & Taylor, Paul & Wilson, Rob, 1994. "Innovation and Export Volumes and Prices--A Disaggregated Study," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 102-135, January.
    25. Valdemar Smith & Erik Strøjer Madsen & Mogens Dilling-Hansen, 2002. "Do R&D Investments Affect Export Performance?," CIE Discussion Papers 2002-09, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    26. Wakelin, Katharine, 1998. "Innovation and export behaviour at the firm level," Research Policy, Elsevier, vol. 26(7-8), pages 829-841, April.
    27. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
    28. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
    29. Greenhalgh, Christine, 1990. "Innovation and Trade Performance in the United Kingdom," Economic Journal, Royal Economic Society, vol. 100(400), pages 105-118, Supplemen.
    30. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-1091, December.
    31. Hughes, Kirsty S., 1986. "Exports and innovation: A simultaneous model," European Economic Review, Elsevier, vol. 30(2), pages 383-399, April.
    32. Werner Smolny, 2003. "Determinants of innovation behaviour and investment estimates for west-german manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 449-463.
    33. Lunn, John E, 1986. "An Empirical Analysis of Process and Product Patenting: A Simultaneous Equation Framework," Journal of Industrial Economics, Wiley Blackwell, vol. 34(3), pages 319-330, March.
    34. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefan Lachenmaier & Ludger Woessmann, 2004. "Does Innovation Cause Exports? Evidence from Exogenous Innovation Impulses and Obstacles," CESifo Working Paper Series 1178, CESifo.
    2. Tomasz Brodzicki & Dorota Ciolek, 2016. "Creativity pays off. Innovation, innovation strategy, and internationalization," Working Papers 1601, Instytut Rozwoju, Institute for Development.
    3. R Harris & Q Li, "undated". "Exporting, R&D and Absorptive Capacity in UK Establishments: Evidence from the 2001 Community Innovation Survey," Working Papers 2006_19, Business School - Economics, University of Glasgow.
    4. Richard Harris & John Moffat, 2011. "R&D, Innovation and Exporting," SERC Discussion Papers 0073, Spatial Economics Research Centre, LSE.
    5. Alka Chadha, 2005. "Product cycles, innovation and exports: A study of Indian pharmaceuticals," Departmental Working Papers wp0511, National University of Singapore, Department of Economics.
    6. Abdul Rauf & Ying Ma & Abdul Jalil, 2019. "Revisiting the Innovation-export Nexus using Industry-level Data: Evidence from China's Large- and Medium-sized Industrial Enterprises," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 73-80.
    7. Di Cintio, Marco & Ghosh, Sucharita & Grassi, Emanuele, 2017. "Firm growth, R&D expenditures and exports: An empirical analysis of italian SMEs," Research Policy, Elsevier, vol. 46(4), pages 836-852.
    8. Sascha Becker & Peter Egger, 2013. "Endogenous product versus process innovation and a firm’s propensity to export," Empirical Economics, Springer, vol. 44(1), pages 329-354, February.
    9. Rodil, Óscar & Vence, Xavier & Sánchez, María del Carmen, 2016. "The relationship between innovation and export behaviour: The case of Galician firms," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 248-265.
    10. Patrick Artus, 1993. "Croissance endogène : revue des modèles et tentatives de synthèse," Revue Économique, Programme National Persée, vol. 44(2), pages 189-228.
    11. Gancia, Gino & Zilibotti, Fabrizio, 2005. "Horizontal Innovation in the Theory of Growth and Development," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170, Elsevier.
    12. Marco Di Cintio & Sucharita Ghosh & Emanuele Grassi, 2016. "Firm Employment Growth, R&D Expenditures and Exports," Working Papers 2016.44, Fondazione Eni Enrico Mattei.
    13. Wei-Chih Chen, 2013. "The Extensive and Intensive Margins of Exports: The Role of Innovation," The World Economy, Wiley Blackwell, vol. 36(5), pages 607-635, May.
    14. Liu, Ying & Wang, Zhe & Yin, Xiaopeng, 2016. "Economic integration, product cycles and regime effects," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 275-283.
    15. Marcelo José Braga Nonnenberg & Ana Paula Avellar, 2013. "Exportações e Processos Inovativos: Um Estudo Para a América Latina e a Europa do Leste," Discussion Papers 1899, Instituto de Pesquisa Econômica Aplicada - IPEA.
    16. Marco Di Cintio & Sucharita Ghosh & Emanuele Grassi, 2016. "Firm Employment Growth, R&D Expenditures and Exports," Working Papers 2016.44, Fondazione Eni Enrico Mattei.
    17. Ainura Uzagalieva & Evžen Kocenda & Antonio Menezes, 2010. "Technological Imitation and Innovation in New European Union Markets," CESifo Working Paper Series 3039, CESifo.
    18. Majumdar, Sumit K., 2016. "R&D and the overseas earnings of Indian firms," Technology in Society, Elsevier, vol. 44(C), pages 104-111.
    19. Dosi, Giovanni & Grazzi, Marco & Moschella, Daniele, 2015. "Technology and costs in international competitiveness: From countries and sectors to firms," Research Policy, Elsevier, vol. 44(10), pages 1795-1814.
    20. Pol Antràs, 2005. "Incomplete Contracts and the Product Cycle," American Economic Review, American Economic Association, vol. 95(4), pages 1054-1073, September.

    More about this item

    Keywords

    Innovation; exports; trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecm:ausm04:200. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/essssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.