Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on Their R&D?

Olof Ejermo and Karin Bergman

Journal of Industry, Competition and Trade, 2014, vol. 14, issue 3, 367-391

Abstract: While the distinction between manufacturing and services becomes increasingly blurred to some observers, we find, using a panel of Swedish firms, clear evidence that foreign sales (exports) are more important than domestic sales for stimulating R&D. This is particularly clear for manufacturing and this importance of foreign sales has increased over time, simultaneous to an opening up of the Swedish economy. Even though service industries have seen an increase in both R&D and trade over time, it is thus mainly manufacturing that has benefited from increased possibilities for absorptive capacity. This result suggests a clear dichotomy between manufacturing and services in terms of how they react to trade and how they turn towards the foreign market vs. the domestic market to find stimuli for innovation. Copyright Springer Science+Business Media New York 2014

Keywords: Research and development; Foreign and domestic sales; Services; Manufacturing; D22; F14; F43; L60; L80; O14; O31; O33; O52 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s10842-013-0165-x

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