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From innovation to exporting or vice versa? Causal link between innovation activity and exporting in Slovenian microdata

Joze Damijan, Crt Kostevc and Sašo Polanec

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: Firm productivity and export decision are closely related to its innovation ac- tivity. Product innovation may play a more important role in the decision to start exporting, while the decision for process innovation may be triggered by success- ful exporting. This suggests that the causality between innovation and exporting may run from product innovation to exporting and conesequently from exporting to process innovation and reverse productivity improvements. Using detailed mi- crodata, including innovation survey, industrial production survey and information on trade, for Slovenian firms in 1996-2002 we investigate this dual causal relation- ship between firms' innovation and exporting activity. We find no evidence for the hypothesis that either product or process innovations increase the probability of becoming a first time exporter, but find consistent support both in the innovation survey as well as in the industrial production survey that exporting does lead to pro- ductivity improvements. These, however, are likely to be related to process rather than product innovations and are limited to a sample of medium and large sized first time exporters only.

Keywords: Firm heterogeneity; innovation; exporting; productivity; matching (search for similar items in EconPapers)
JEL-codes: D24 F14 F21 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-eff, nep-ent, nep-ino, nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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