Empirical analysis of innovation and trade in Europe: a gravity model approach

Konstantin Kunze

International Journal of Trade and Global Markets, 2016, vol. 9, issue 3, 197-211

Abstract: This paper examines the relationship between innovation and trade in Europe. Applying the gravity model R%D expenditures and patent counts, both subdivided into sectors have been used as proxies for innovation. The results imply that innovation is a significant determinant for imports and exports; however, this relationship is not significant in every sector. Furthermore, the results suggest that innovation-output, captured by the number of patents, is associated with bigger effects on trade than innovation-input, in the form of R%D expenditures. The robustness tests indicate that endogeneity does not bias the results.

Keywords: innovation; patents; R%D expenditure; exports; imports; gravity model; research and development; trade; Europe. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijtrgm:v:9:y:2016:i:3:p:197-211

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