Trade, innovation and productivity

Aranzazu Crespo Rodríguez ()
Additional contact information
Aranzazu Crespo Rodríguez: Universidad Carlos III de Madrid

No 2012-06, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: Empirical evidence shows that trade liberalization improves pro- ductivity not just because of a selection e ect but also because of productivity gains within rms. This paper proposes a model that allows for both channels, by adding the option to innovate to a trade model. In contrast to the existing literature, the process innovation is modeled as a continuous variable and there is both a xed and a variable cost to innovate. The interaction between the innovation and export choices is key to understand the di erent equilibria in the open economy and the outcomes following a trade liberalization. I calibrate the model to match the Spanish economy and explore the consequences of di erent trade policies. Simulations reveal that a trade policy that enhances innovation does not necessarily induce larger productivity gains.

Keywords: process innovation; firm heterogeneity; trade policy (search for similar items in EconPapers)
JEL-codes: F12 F14 O24 O31 (search for similar items in EconPapers)
Date: 2012-06-07
New Economics Papers: this item is included in nep-ino and nep-int
Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the Bank of Spain Excellence Programme
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.imdea.org/pdf/imdea-wp2012-06 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to repec.imdea.org:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

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:imd:wpaper:wp2012-06

Access Statistics for this paper

More papers in Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales Contact information at EDIRC.
Bibliographic data for series maintained by IMDEA RePEc Maintainer ( this e-mail address is bad, please contact ).