Anatomy of Learning-from-Exporting: Role of foreign knowledge acquisition

The essence of learning-from-exporting can be thought of as a process in which exporters absorb international knowledge spillovers and feed it back to their innovation efforts. Learning-from-exporting is often difficult to observe because it is conditional on at least two efforts: information gathering from foreign markets and zealous R&D. We exploit unique survey data to explicitly analyze the contribution of these activities to exporters' innovation. We find that gathering information from foreign markets significantly raises exporters' probability of succeeding in technology upgrades or new product developments, along with their R&D activities. While learning about the latest foreign technology and competitor products is at the core of such knowledge acquisition, international marketing activities, such as gathering feedback from foreign customers or information on the taste and needs of foreign customers, is also associated with a significant contribution. The importance of foreign knowledge acquisition is also confirmed for exporters that do not serve high-income markets or those that supply intermediate goods. Although it is likely that the acquisition of foreign knowledge contributes to exporters' innovation strategies, such as where to allocate R&D resources, it does not seem to raise the marginal effectiveness of R&D.