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New Stuff or Better Ways: What Matters to Survive International Markets?

Author

Listed:
  • Adriana Peluffo

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

  • Ernesto Silva

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

Abstract

Innovation and export decisions are closely interlinked. Both activities contribute to firm performance in various ways: exporting provides a wider market to sell products, while innovation provides new and better products to supply those markets and/or more efficient ways to reduce costs. The connection of innovation and exporting is of major interest to developing countries aiming to achieve higher growth and wellbeing given foreign markets are both a new challenge and a source of knowledge for firms. This study analyzes how different types of innovation affect export behavior at the firm level, as well as the consequence of exporting on further innovation activities. We use an unbalanced panel of Uruguayan manufacturing firms which provides information from 2000 to 2012. We use logistic regression and matching with difference-in-differences techniques. Using LOGIT models, we find that previous innovation increases the probability of exporting. Unlike other studies, productivity-enhancing (or cost-reducing) innovation shows a stronger correlation than product innovation. However, using Matching and Difference-in-Differences we were not able to establish a causality link from innovation to exporting. We find no consistent evidence of an impact of previous exports on innovation activities.

Suggested Citation

  • Adriana Peluffo & Ernesto Silva, 2016. "New Stuff or Better Ways: What Matters to Survive International Markets?," Documentos de Trabajo (working papers) 16-07, Instituto de Economia - IECON.
  • Handle: RePEc:ulr:wpaper:dt-07-16
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    References listed on IDEAS

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    Cited by:

    1. Augusto Souto, 2017. "¿Cuál es la incidencia de la innovación sobre las exportaciones del sector industrial uruguayo? Un análisis para el período 1998-2012," Documentos de Investigacion Estudiantil (students working papers) 17-03, Instituto de Economia - IECON.

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    More about this item

    Keywords

    product innovation; process innovation; exporting;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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