The Impact of Exports on Innovation: Theory and Evidence

Philippe Aghion, Antonin Bergeaud, Matthieu Lequien, Marc J. Melitz
Authors registered in the RePEc Author Service: Marc J. Melitz, Antonin Bergeaud and Matthieu Lequien

Working papers from Banque de France

Abstract: This paper investigates the effect of export shocks on innovation. On the one hand a positive shock increases market size and therefore innovation incentives for all firms. On the other hand it increases competition as more firms enter the export market. This in turn reduces profits and therefore innovation incentives particularly for firms with low productivity. Overall the positive impact of the export shock on innovation is magnified for high productivity firms, whereas it may negatively affect innovation in low productivity firms. We test this prediction with patent, customs and production data covering all French manufacturing firms. To address potential endogeneity issues, we construct firm-level export proxies which respond to aggregate conditions in a firm's export destinations but are exogenous to firm-level decisions. We show that patenting robustly increases more with export demand for initially more productive firms. This effect is reversed for the least productive firms as the negative competition effect dominates.

Keywords: Innovation; trade; export; demand shocks; patents (search for similar items in EconPapers)
JEL-codes: D21 F13 F14 F41 O30 O47 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2018
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (138)

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... ocuments/wp678_0.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:bfr:banfra:678

Access Statistics for this paper

More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().