Innovation and the Export-Productivity Link

Abstract

In this paper, we explore the relationship between innovation activity, productivity, and exports, using a panel of Spanish manufacturing firms for 1990-1998. Our results - based on non-parametric tests - suggest that firm innovation status is critical in explaining the positive export-productivity association documented in prior research. For the sample of small innovating firms, we find no significant differences in productivity levels between exporters and non-exporters. Especially product innovation seems to explain this positive association between exports and productivity. For small non-innovating firms with the low and medium productivity levels, however, exporting firms continue to exhibit higher productivity than non-exporting firms.

Keywords: innovation, productivity, exports, industry dynamics