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Does innovation cause exports? Evidence from exogenous innovation impulses and obstacles using German micro data

Listed author(s):
  • Lachenmaier, Stefan
  • Wößmann, Ludger

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. Our instrumental-variable strategy identifies variation in innovative activity that is caused by specific impulses and obstacles reported by the firms, which can reasonably be viewed as exogenous to firms’ export performance. We find that innovation attributable to this variation leads to an increase of roughly seven percentage points in the export share of German manufacturing firms. The evidence is robust to several alternative specifications and heterogeneous across sectors, being stronger in technology-intensive sectors.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 19482.

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Date of creation: 2006
Publication status: Published in Oxford Economic Papers 2 58(2006): pp. 317-350
Handle: RePEc:lmu:muenar:19482
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