IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Does Trade Stimulate Innovation?: Evidence from Firm-Product Data

Listed author(s):
  • Ana Margarida Fernandes

    (World Bank)

  • Caroline Paunov


This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values (prices) and imports’ transport costs are used as an exogenous proxy for import competition. The estimates show a negative effect of transport costs on product quality. The paper provides explicit evidence that estimated increases in unit values capture product quality upgrading, and that competition effects of imports explain our results. Easier access to intermediate inputs also fosters quality upgrading. Cet article examine si le fait d’être en compétition avec des produits d’importation affecte la décision des entreprises de s’engager dans l’innovation incrémentale, qui se reflète dans une amélioration de la qualité des produits. Les résultats économétriques sont fondés sur de riches données chiliennes d’entreprises et de leurs produits. La qualité des produits est mesurée par leur valeur unitaire (leur prix) et le coût de transport des importations est utilisé comme une mesure exogène du degré de compétition des importations. Les estimations montrent un effet négatif du coût de transport sur la qualité des produits. L’article démontre que les incréments dans la valeur unitaire reflètent les incréments dans la qualité des produits et que la compétition explique nos résultats. Un accès plus aisé aux produits intermédiaires participe également à une amélioration de la qualité des produits.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 286.

in new window

Date of creation: 26 Jan 2010
Handle: RePEc:oec:devaaa:286-en
Contact details of provider: Postal:
2 rue Andre Pascal, 75775 Paris Cedex 16

Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oec:devaaa:286-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.