Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109611
Authors: 
Lin, Faqin
Tang, Hsiao Chink
Year of Publication: 
2013
Series/Report no.: 
ADB Working Paper Series on Regional Economic Integration 111
Abstract: 
This paper investigates how exporting affects firm innovation. We embed innovation into a firm heterogeneity model with productivity, where in equilibrium the model shows that exporters invest more in innovation, such as research and development (R&D), than non-exporters. Using firm-level data from the People’s Republic of China (PRC), we apply the Levinsohn and Petrin (2003) method of estimating firm productivity and matching econometrics to control for endogeneity. The results show, on average, in contrast to non-exporters, exporters increase their R&D intensity by more than 5%, raise their R&D expenditure by more than 33%, and are 4% more likely to engage in R&D activity. In addition, we find exporting to have a smaller impact on innovation among firms that export processed goods, specifically, those in the electronics sectors, located in coastal provinces, and foreign-owned.
Subjects: 
Exporting
innovation
firm heterogeneity
matching
JEL: 
D21
F14
O31
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/igo
Document Type: 
Working Paper

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