Causal Link between Exporting and Innovation Activity. Evidence from Slovenian Firms

In this paper we investigate the causal relationship between firm's innovation and exporting activity by using detailed firm-level data on innovation activity, financial variables and information on trade for Slovenian firms in 1996-2002. We employ the bivariate probit regression on a system of innovation and exporting equations as well as matching procedures to tease out the direction of causality between exporting status and innovation activity. Our results suggest a strong positive relationship between exporting and innovation activity in both directions, while results on the impacts of lagged export (or innovation) status on the probability to start innovating (or exporting) are less conclusive. In other words, whereby innovating status increases the probability of exporting it does not increase the probability of becoming a first time exporter, and vice versa. The results remain unaltered also after allowing for discrimination between product and process innovation.DYNREG, firm heterogeneity, innovation, exporting, matching

Knowledge Transfer, Innovation and Growth

Recent empirical work has examined the extent to which national and international spillovers affect the functioning of a firm. Foreign direct investment and trade have been shown to serve as channels for the mediation of knowledge spillovers. The aim of this paper is to analyse whether, and to what extent, firm ability to innovate is induced by firm’s own R&D activity and what is the effect of factors external to firm. We first estimate the impact of firms' internal R&D capital and external R&D spillovers on innovation activity within an integrated dynamic model. In the second step, we proceed to estimate the impact of firms' innovations on productivity growth. Using firm-level innovation and accounting data for a large sample of Slovenian firms from 1996-2002, the paper produces some interesting findings. First, firm R&D expenditures as well as external knowledge spillovers, such as national and international public R&D subsidies, foreign ownership and intra-sector innovation spillovers foster the ability of firms to innovate. Second, innovations resulting from firm’s R&D may contribute substantially to its total factor productivity growth. Here, foreign ownership is shown to have a dual impact on firm’s TFP growth - while it enhances firm ability to innovate it also contributes to TFP growth via superior organization techniques and other channels of knowledge diffusion. These results, however, are not robust to different econometric techniques. By using matching techniques and firm propensity to innovate in order to match innovating firms with otherwise similar non-innovating firms we find no support for the importance of innovation on productivity growth.DYNREG, innovation, external knowledge spillovers, FDI, trade

The impact of European integration on adjustment pattern of regional wages in transition countries: testing competitive economic geography models

In the present paper, we augment the Fujita-Krugman-Venables (FKV) economic geography model by breaking the implied regional symmetry and by introducing a second factor of production, capital, in order to study the within-country regional effects of trade liberalization. In contrast to the Krugman (1991) model, the FKV and our model do not predict typical core ?periphery regional polarization as labor is assumed to be either imperfectly mobile and/or capital is perfectly mobile between regions. Both models result in a non-monotonic, U-shaped response of relative regional wages to trade liberalization. Major difference between the two approaches is that our model allows for FDI flows between countries. FDI inflows are shown to accelerate the regional adjustment process in the home country, as they are initially attracted to poor, border regions characterized by lower wages and higher returns to capital. Our model therefore results in a faster convergence of relative regional wages, i.e. in a more upward and to the right shifted U-shaped response of relative wages. In addition, we then examine the exact adjustment pattern of relative regional wages in five transition countries after they have liberalized their trade with the EU. We study which of the three competitive EG models is a more appropriate approximation of the actual regional adjustment pattern in selected transition countries

Firms' pattern of trade and access to finance.

This paper summarizes recent advances in the empirical research on firms' learning from trade participation and the role of finance in both starting to trade, surviving in export markets as well as expanding along the intensive and extensive trade margins. It highlights the increased importance of imports, which impacts at firms' performance primarily through relaxed technological constraints by increasing firms's scope of inputs and by lowering their input price index. In addition, imports are shown to boost firms' innovation and introduction of new products, which facilitates firms' decisions to start exporting. Another important aspect that has been highlighted is the essential role of finance in furthering firms'survival and expansion in export markets.exports,learning-by-exports,export expansion, financial constraints, credit crunch;

In search of true productivity differences

Recent work on production functions estimation revealed that substantial biases can be introduced into the estimates when the assumption of perfect competition and price exogeneity is not satisfied in the data itself. As Klette and Griliches (1996) show applying traditional econometrics in differentiated good markets will negatively bias the scale estimates of the production function. In fact, when deflated sales are used as a proxy for output in case of differentiated good industries scale economies (and subsequently productivity) cannot be estimated independently of markups. We extend this basic framework to show that, if exporting markups are smaller than those attainable in the domestic market, the Klette-Griliches estimation procedure will tend to overestimate exporting firm markups and underestimate their productivity. In addition, we provide an estimation algorithm based on the Olley-Pakes (1996) framework that could serve to ensure unbiased estimates of exporter productivity

Performance on Exports: Continuous Productivity Improvements or Capacity Utilization

Following along the lines of a growing literature on the causal link between export- ing and productivity this paper analyzes the existence of flearning-by-exporting using firm-level data. The paper asks whether, in addition to better perfirming firms self-selecting into exports and multinational production, exporting (multina- tional production) further improves their perfirmance compared with non-exporters. We develop and test a simple model of trade and international production with het- erogeneous firms that generates learning effects through competition in the export markets. The estimations perfirmed on the sample of Slovenian manufacturing enter- prises between 1994 and 2002 indicate that more productive firms tend to self-select into more competitive markets, while there is no conclusive evidence of learning-by- exporting. Although new exporters experienced a surge in productivity in the initial year of exports the effect dissipates as soon as the following year. Confronting the data on factor accumulation with TFP measures indicates that the perceived learning effects may in fact only be a consequence of increased capacity utilization brought forth by the opening of an additional market

The effects of strain rate and temperature on commercial acrylic artist paints aged one year to decades

Acrylic artist paints are viscoelastic composites containing a high molecular weight copolymer, pigment and a variety of additives. The glass transition temperature of the latex binder is typically slightly below ambient conditions, giving mechanical properties that are strongly dependent on strain rate and temperature. In previous work, the viscoelastic behaviour of custom-formulated latex artist paints was reported for films with known volume fractions of pigment using data from uniaxial tensile tests at different strain rates and temperatures. Secant Young’s modulus and failure strain master curves were constructed for each film through time-temperature superposition, allowing predictions beyond the experimental timescale at a selected reference temperature. A similar analysis is now presented for a small set of commercial artist paints tested at ages of 1 and 27 years. Experimental shift factor values are reported with fits to the Arrhenius, WLF and Vogel Fulcher equations, along with a comparison with published data for acrylic polymers. The tensile results highlight a spectrum of properties that acrylic paints may exhibit—brittle glass to hyperelastic—depending on the conditions during deformation. Strong similarities are shown between products from different manufacturers, and the findings suggest a high degree of stability with age. A method for predicting failure as a function of strain rate and temperature is also presented, and the methodology gives a framework for investigating other artist materials and the factors influencing their mechanical properties

Exports and Productivity: Comparable Evidence for 14 Countries

We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: Exporters are more productive than non-exporters when observed and unobserved heterogeneity are controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is strong evidence in favour of self-selection of more productive firms into export markets, but nearly no evidence in favour of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find that countries that are more open and have more effective government report higher productivity premia. However, the level of development per se does not appear to be an explanation for the observed cross-country differences.exports; productivity; micro data; international comparison