Productivity and R&D as Drivers of Exports and Domestic Sales: Semi‐Parametric Evidence from French Firm‐Level Data

15 Pages Posted: 15 Jul 2015

See all articles by Peter H. Egger

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Katharina Erhardt

ETH Zürich - KOF Swiss Economic Institute

Andrea Lassmann

ETH Zürich - KOF Swiss Economic Institute

Date Written: July 2015

Abstract

Earlier work suggests that the relationship between exports and trade costs and exports and foreign market size is well described by a log‐linear functional form. A log‐linear relationship between exports and productivity is the underlying workhorse models of trade as well. The same pattern is assumed to hold for domestic sales. How the intensity of R&D affects quality or preferences and productivity, and hence, exports and domestic sales, is less well established. This paper is devoted to estimating the relationship between productivity, R&D and sales to different markets in a flexible, nonparametric way which is embedded in a semiparametric estimation approach. Using French firm‐level data, we can confirm a standard log‐linear relationship for exports. However, it takes a rather non‐linear functional form for domestic sales, suggesting that the data are generated by a potentially different class of models than the one considered traditionally.

Suggested Citation

Egger, Peter H. and Erhardt, Katharina and Lassmann, Andrea, Productivity and R&D as Drivers of Exports and Domestic Sales: Semi‐Parametric Evidence from French Firm‐Level Data (July 2015). The World Economy, Vol. 38, Issue 7, pp. 1115-1129, 2015. Available at SSRN: https://ssrn.com/abstract=2630853 or http://dx.doi.org/10.1111/twec.12223

Peter H. Egger (Contact Author)

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

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Munich, DE-81679
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Ludwig-Maximilians University of Munich

Schackstr. 4
Munich, 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Poschinger Str. 5
Munich, DE-81679
Germany

Katharina Erhardt

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Andrea Lassmann

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

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