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Trade and innovation in services : evidence from a developing economy

Author

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  • Iacovone, Leonardo
  • Mattoo, Aaditya
  • Zahler, Andres

Abstract

Studies on innovation and international trade have traditionally focused on manufacturing because neither was seen as important for services. Moreover, the few existing studies on services focus only on industrial countries, although in many developing countries services are already the largest sector in the economy and an important determinant of overall productivity growth. Using a recent firm-level innovation survey for Chile to compare the manufacturing and"tradable"services sector, this paper reveals some novel patterns. First, although services firms have on average a much lower propensity to export than manufacturing firms, services exports are less dominated by large firms and tend to be more skill intensive than manufacturing exports. Second, services firms appear to be as innovative as -- and in some cases more innovative than -- manufacturing firms, in terms of both inputs and outputs of"technological"innovative activity, although services innovations more often take a"non-technological"form. Third, services exporters (like manufacturing exporters) tend to be significantly more innovative than non-exporters, with a wider gap for innovations close to the global technological frontier. These findings suggest that the growing faith in services as a source of both trade and innovative dynamism may not be misplaced.

Suggested Citation

  • Iacovone, Leonardo & Mattoo, Aaditya & Zahler, Andres, 2013. "Trade and innovation in services : evidence from a developing economy," Policy Research Working Paper Series 6520, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6520
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    References listed on IDEAS

    as
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    Cited by:

    1. Machado Léo, Ricardo & Tello‐Gamarra, Jorge, 2016. "Inovac¸ão em servic¸os: estado da arte e perspectivas futuras
      [Innovation in services: state of the art and future perspectives]
      ," MPRA Paper 82195, University Library of Munich, Germany, revised 29 Mar 2017.
    2. Francesco Bripi & David Loschiavo & Davide Revelli, 2017. "Services trade and credit frictions: evidence from matched bank-firm data," Temi di discussione (Economic working papers) 1110, Bank of Italy, Economic Research and International Relations Area.
    3. repec:eee:wdevel:v:99:y:2017:i:c:p:75-94 is not listed on IDEAS
    4. International Monetary Fund, 2013. "Kuwait; Selected Issues," IMF Staff Country Reports 13/337, International Monetary Fund.
    5. Roberto Álvarez, 2016. "The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms," Working Papers wp428, University of Chile, Department of Economics.

    More about this item

    Keywords

    E-Business; ICT Policy and Strategies; Public Sector Corruption&Anticorruption Measures; Housing&Human Habitats; Commodities;

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