The Dynamic Linkages Among Exports, R&D and Productivity

This paper estimates a dynamic model of a firm's decision to export and invest in R&D, in which we allow past export and R&D experience to endogenously affect productivity. In our empirical strategy, we proceed in two steps: in the first step, using as starting point the traditional con...

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Bibliographic Details
Published in:World economy 2015-04, Vol.38 (4), p.583-612
Main Authors: Máñez, Juan A., Rochina-Barrachina, Maria E., Sanchis-Llopis, Juan A.
Format: Article
Language:English
Subjects:
Decision making
Decision making models
Estimating techniques
Exports
Exports and Imports
Foreign investment
Law
Manufacturing
Productivity
R&D
Research & development
Research and Development
Spain
Studies
Trade theory
World economy
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Summary:This paper estimates a dynamic model of a firm's decision to export and invest in R&D, in which we allow past export and R&D experience to endogenously affect productivity. In our empirical strategy, we proceed in two steps: in the first step, using as starting point the traditional control approach method to estimate total factor productivity, we consider a more general process driving the law of motion of productivity in which we recognise the potential role that export and R&D experience might have in shaping future firms' productivity, and test whether this assumption holds; in the second step, we estimate a bivariate dynamic model of the firm's decision to invest in R&D and export, in which we analyse the linkages among investing in R&D, exporting and productivity. Using a representative sample of Spanish manufacturing firms for the period 1990–2009, we find that both export and R&D positively affect future productivity, which will drive more firms to self‐select in those activities.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.12160