Innovation, export performance and trade elasticities across different sectors

Ana Bottega and João Prates Romero ()

Structural Change and Economic Dynamics, 2021, vol. 58, issue C, 174-184

Abstract: This paper provides new evidence on the relationship between innovation, export performance and trade elasticities across different sectors. It explores a unique database, which comprises a diverse selection of 15 countries over the period 1976-2012. The empirical investigation also employs different regression techniques, namely a system GMM estimator and a panel error correction model. All estimations coincide in confirming the well-known result that technological competitiveness is a relevant determinant of exports, more so than price competitiveness. Moreover, they reveal the following new findings: (i) excluding technological competitiveness inflates income elasticities due to omitted variable bias; (ii) income elasticities remain significant even when introducing technological competitiveness; (iii) Krugman's hypothesis that income elasticities are proportional to each country's share in the world's product variety is rejected; (iv) technological competitiveness and foreign income exert larger effects on high-tech than on low-tech exports; (v) price competitiveness is more relevant for low-tech exports.

Keywords: Innovation; Export performance; Export demand functions; Trade elasticities (search for similar items in EconPapers)
JEL-codes: F10 O30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:58:y:2021:i:c:p:174-184

DOI: 10.1016/j.strueco.2021.05.008

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