Firm Productivity, innovation and Financial Development
How 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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Keywords: Cross country analysis; Access to capital markets; Financial sector; Economic growth; Industrial production; Labor productivity; Private sector; Total factor productivity; innovation; survey data; financial development.; survey; dummy variable; equation; stock market; Innovation and Invention: Processes and Incentives; Financial Development; General Financial Markets;
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, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; 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:
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