The Effect of Innovation on International Trade: Selected Medium-High-Technology Industries, Evidence on Iran+3

Abdollah Ghanbari () and Marzieh Ahmadi ()
Additional contact information
Abdollah Ghanbari: Department of Economics, Isfahan University, Isfahan, Iran.
Marzieh Ahmadi: Department of Economics, Isfahan University, Isfahan, Iran.

Iranian Economic Review (IER), 2017, vol. 21, issue 1, 21-44

Abstract: The relationship between technology and international competitiveness dates back to the neo-technological trade theories of the 1960s. This approach considers difference in technology as the primary motive for difference among nations in terms of trade performance. The technology gap approach emphasizes inter-country differences in innovativeness as the basis for international trade flows. The gravity equation is the most successful and celebrated empirical model in international Trade. The empirical gravity literature does not include any form of multilateral resistance in the analysis. The importance of using fixed effects to control for country-specific characteristics has been emphasized in an influential paper by Anderson & Van Wincoop (2003). This paper investigates the effect of innovation on international trade. It examines the impact of R&D as a proxy of innovation on three medium high-tech industries exports in Iran, Japan, Korea and Australia using panel data method over a period of 10 years. We incorporate an industry-specific intercept into the model for estimating the role of innovation in explaining industry-level trade across selected countries. Our findings show that innovation has a positive and economically large effect on export performance of all industries. This suggests innovation is a central driver of trade.

Keywords: R&D; Innovation; International Trade; Gravity Equation. (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
ftp://80.66.179.253/eut/journl/20171-2.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:21:y:2017:i:1:p:21

Access Statistics for this article

Iranian Economic Review (IER) is currently edited by Dr.Hossien Abbasinejad

More articles in Iranian Economic Review (IER) from Faculty of Economics,University of Tehran.Tehran,Iran Contact information at EDIRC.
Bibliographic data for series maintained by [z.rahimalipour] ().