Trade and innovation in services: evidence from a developing economy

Leonardo Iacovone, Aaditya Mattoo and Andres Zahler

No 6520, Policy Research Working Paper Series from The World Bank

Abstract: Studies on innovation and international trade have traditionally focused on manufacturing because neither was seen as important for services. Moreover, the few existing studies on services focus only on industrial countries, although in many developing countries services are already the largest sector in the economy and an important determinant of overall productivity growth. Using a recent firm-level innovation survey for Chile to compare the manufacturing and"tradable"services sector, this paper reveals some novel patterns. First, although services firms have on average a much lower propensity to export than manufacturing firms, services exports are less dominated by large firms and tend to be more skill intensive than manufacturing exports. Second, services firms appear to be as innovative as -- and in some cases more innovative than -- manufacturing firms, in terms of both inputs and outputs of"technological"innovative activity, although services innovations more often take a"non-technological"form. Third, services exporters (like manufacturing exporters) tend to be significantly more innovative than non-exporters, with a wider gap for innovations close to the global technological frontier. These findings suggest that the growing faith in services as a source of both trade and innovative dynamism may not be misplaced.

Keywords: E-Business; ICT Policy and Strategies; Public Sector Corruption&Anticorruption Measures; Housing&Human Habitats; Commodities (search for similar items in EconPapers)
Date: 2013-06-01
New Economics Papers: this item is included in nep-cse, nep-dev, nep-ino, nep-int and nep-knm
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Citations: View citations in EconPapers (1)

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Journal Article: Trade and Innovation in Services: Evidence from a Developing Economy (2014)
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