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The Complementary Role of Exports and R&D Investments as Sources of Productivity Growth

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  • Bee Yan Aw
  • Mark J. Roberts
  • Tor Winston

Abstract

This paper examines two potential channels of knowledge acquisition that underlie firm productivity growth in the Taiwanese electronics industry: participation in the export market and investments in R&D and/or worker training. We focus on the argument that a firm's own investments in R&D are necessary for the firm to assimilate knowledge or expertise gained from foreign contacts and thus are an important component of the process of learning-by-exporting. Firm-level panel data from 1986, 1991, and 1996 is used to investigate a firm's decision to invest in these two activities and to assess the effects of these investments on the firm's future total factor productivity. The empirical model consists of four equations. The firm's decisions to export and invest in R&D and/or worker training are modeled with a bivariate probit model that recognizes the interdependence of the decisions. We then estimate how participation in these investment activities alters the firm's future productivity trajectory while controlling for the potential selection bias introduced by endogenous firm exit. The primary empirical findings are that, on average, firms that export but do not invest in R&D and/or worker training have significantly higher future productivity than firms that do not participate in either activity. In addition, firms that export and invest in R&D and/or worker training have significantly higher future productivity than firms that only export. These findings are consistent with the hypothesis that export experience is an important source of productivity growth for Taiwanese firms and that firm investments in R&D and worker training facilitate their ability to benefit from their exposure to the export market.

Suggested Citation

  • Bee Yan Aw & Mark J. Roberts & Tor Winston, 2005. "The Complementary Role of Exports and R&D Investments as Sources of Productivity Growth," NBER Working Papers 11774, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11774
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    Cited by:

    1. Liangfeng Hao & Bin Qiu & Lisette Cervantes, 2016. "Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-20, November.
    2. Tabrizy, Saleh S. & Trofimenko, Natalia, 2010. "Scope for export-led growth in a large emerging economy: Is India learning by exporting?," Kiel Working Papers 1633, Kiel Institute for the World Economy (IfW).
    3. Abbas Aminifard Author_Email: aaminifard@yahoo.com & Karim Azarbaijani & Seyed Komail Tayebi, 2011. "Trade Liberalization And Unobservable Productivity In Iran'S Manufacturing Industry: An Application Of Olley -Peaks Approach," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-252, Conference Master Resources.
    4. Jože.P.Damijan & Črt. Kostevc, 2010. "Learning from trade through innovation: Causal link between imports, exports and innovation in Spanish microdata," LICOS Discussion Papers 26410, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. repec:eee:reecon:v:71:y:2017:i:3:p:540-563 is not listed on IDEAS
    6. Abbas Aminifard & Karim Azarbaijani & Seyed Komail Tayebi, 2010. "The Impact of Trade Liberalization on Iran's Manufacturing TFP: An Application of Olley -Peaks Approach," Iranian Economic Review, Economics faculty of Tehran university, vol. 15(1), pages 101-116, winter.
    7. Fabian Unterlass, 2013. "The relationship between innovation, exports and economic performance. Empirical evidence for 21 EU countries," EcoMod2013 5655, EcoMod.
    8. Tomiura, Eiichi, 2007. "Effects of R&D and networking on the export decision of Japanese firms," Research Policy, Elsevier, vol. 36(5), pages 758-767, June.
    9. Pradhan, Jaya Prakash, 2010. "R&D strategy of small and medium enterprises in India: Trends and determinants," MPRA Paper 20951, University Library of Munich, Germany.
    10. Joze P. Damijan & Crt Kostevc, 2011. "Firms’ Patterns of Trade and Access to Finance," Chapters,in: Post-Crisis Growth and Integration in Europe, chapter 19 Edward Elgar Publishing.
    11. Fernandes, Ana M., 2008. "Firm Productivity in Bangladesh Manufacturing Industries," World Development, Elsevier, vol. 36(10), pages 1725-1744, October.
    12. Mohamed Ayadi & Wided Mattoussi, 2014. "From Productivity to Exporting or Vice Versa? Evidence from Tunisian Manufacturing Sector," Working Papers 852, Economic Research Forum, revised Nov 2014.
    13. Mohamed Ayadi & Wided Matoussi, 2014. "Working Paper - 214 - From Productivity to Exporting or Vice Versa Evidence from Tunisian Manufacturing Sector," Working Paper Series 2150, African Development Bank.
    14. Kathuria, Vinish & Seethamma Natarajan, Rajesh Raj & Sen, Kunal, 2010. "State business relations and manufacturing productivity growth in India," MPRA Paper 20314, University Library of Munich, Germany.
    15. World Bank, 2007. "Bangladesh : Strategy for Sustained Growth, Volume 1. Summary Report," World Bank Other Operational Studies 7765, The World Bank.
    16. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.
    17. David Greenaway & Richard Kneller, 2007. "Industry Differences in the Effect of Export Market Entry: Learning by Exporting?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(3), pages 416-432, October.
    18. repec:wfo:wstudy:41059 is not listed on IDEAS

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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