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The Dynamic Impact of Exporting on Firm R&D Investment

Author

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  • Florin G. Maican
  • Matilda Orth
  • Mark J. Roberts
  • Van Anh Vuong

Abstract

This article estimates a dynamic structural model of firm R&D investment in twelve Swedish manufacturing industries and uses it to measure rates of return to R&D and to simulate the impact of trade restrictions on the investment incentives. R&D spending is found to have a larger impact on firm productivity in the export market than in the domestic market. Export market profits are a substantial source of the expected return to R&D. Counterfactual simulations show that trade restrictions lower both the expected return to R&D and R&D investment level, thus reducing an important source of the dynamic gains from trade. A 20 percent tariff on Swedish exports reduces the expected benefits of R&D by an average of 32.2 percent and lowers the amount of R&D spending by 13.9 percent in the high-tech industries. The corresponding reductions in the low-tech industries are 30.4 and 8.9 percent, respectively. R&D adjustments in response to export tariffs mainly occur on the intensive, rather than the extensive, margin.

Suggested Citation

  • Florin G. Maican & Matilda Orth & Mark J. Roberts & Van Anh Vuong, 2020. "The Dynamic Impact of Exporting on Firm R&D Investment," NBER Working Papers 27986, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27986
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    3. Liu, Mengxiao & Wang, Luhang & Yi, Yimin, 2022. "Quality Innovation, Cost Innovation, Export, and Firm Productivity Evolution: Evidence from the Chinese Electronics Industry," MPRA Paper 113270, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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