Causal Link between Exporting and Innovation Activity. Evidence from Slovenian Firms

Crt Kostevc and Joze Damijan

No DYNREG22, Papers from Economic and Social Research Institute (ESRI)

Abstract: In this paper we investigate the causal relationship between firm's innovation and exporting activity by using detailed firm-level data on innovation activity, financial variables and information on trade for Slovenian firms in 1996-2002. We employ the bivariate probit regression on a system of innovation and exporting equations as well as matching procedures to tease out the direction of causality between exporting status and innovation activity. Our results suggest a strong positive relationship between exporting and innovation activity in both directions, while results on the impacts of lagged export (or innovation) status on the probability to start innovating (or exporting) are less conclusive. In other words, whereby innovating status increases the probability of exporting it does not increase the probability of becoming a first time exporter, and vice versa. The results remain unaltered also after allowing for discrimination between product and process innovation.

Keywords: DYNREG; firm heterogeneity; innovation; exporting; matching (search for similar items in EconPapers)
JEL-codes: D24 F14 F21 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-ent and nep-tra
Note: DYNREG Research Project – Dynamic Regions in a Knowledge-Driven Global Economy: Lessons and Policy Implications for the European Union
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:esr:wpaper:dynreg22

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