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Title:Financial constraints and innovation: why poor countries don't catch up PDF Logo
Authors:Gorodnichenko, Yuriy
Schnitzer, Monika
Issue Date:2010
Series/Report no.:IZA Discussion Papers 4786
Abstract:This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey data which provides direct measures for innovations and firm-specific financial constraints. We find that financial constraints restrain the ability of domestically owned firms to innovate and export and hence to catch up to the technological frontiers. This negative effect is amplified as financial constraints force export and innovation activities to become substitutes although they are generally natural complements.
Subjects:Innovation
productivity
financial constraint
export
technology frontier
BEEPS
JEL:O3
O16
F1
G3
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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