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

  • 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
Date of revision:
Publication status: Published in Oxford Economic Papers 2 58(2006): pp. 317-350
Handle: RePEc:lmu:muenar:19482
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  1. Grossman, G.M. & Helpman, E., 1988. "Comparative Advantage And Long-Run Growth," Papers 39-88, Tel Aviv.
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  12. Gene M. Grossman & Elhanan Helpman, 1989. "Endogenous Product Cycles," NBER Working Papers 2913, National Bureau of Economic Research, Inc.
  13. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-83, December.
  14. Andrew B. Bernard & J. Bradford Jensen, 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," NBER Working Papers 6272, National Bureau of Economic Research, Inc.
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  26. repec:fth:harver:1473 is not listed on IDEAS
  27. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  28. 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.
  29. 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.
  30. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
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