The Complementary Role of Exports and R&D Investments as Sources of Productivity Growth

31 Pages Posted: 16 Feb 2006 Last revised: 29 Sep 2010

See all articles by Bee Yan Aw

Bee Yan Aw

Pennsylvania State University

Mark J. Roberts

Pennsylvania State University - College of the Liberal Arts - Department of Economics; National Bureau of Economic Research (NBER)

Tor Winston

U.S. Department of Justice - Antitrust Division

Date Written: November 2005

Abstract

This paper examines two potential channels of knowledge acquisition that underlie firm productivity growth in the Taiwanese electronics industry: participation in the export market and investments in R&D and/or worker training. We focus on the argument that a firm's own investments in R&D are necessary for the firm to assimilate knowledge or expertise gained from foreign contacts and thus are an important component of the process of learning-by-exporting. Firm-level panel data from 1986, 1991, and 1996 is used to investigate a firm's decision to invest in these two activities and to assess the effects of these investments on the firm's future total factor productivity. The empirical model consists of four equations. The firm's decisions to export and invest in R&D and/or worker training are modeled with a bivariate probit model that recognizes the interdependence of the decisions. We then estimate how participation in these investment activities alters the firm's future productivity trajectory while controlling for the potential selection bias introduced by endogenous firm exit. The primary empirical findings are that, on average, firms that export but do not invest in R&D and/or worker training have significantly higher future productivity than firms that do not participate in either activity. In addition, firms that export and invest in R&D and/or worker training have significantly higher future productivity than firms that only export. These findings are consistent with the hypothesis that export experience is an important source of productivity growth for Taiwanese firms and that firm investments in R&D and worker training facilitate their ability to benefit from their exposure to the export market.

Suggested Citation

Roberts, Bee Yan and Roberts, Mark J. and Winston, Tor, The Complementary Role of Exports and R&D Investments as Sources of Productivity Growth (November 2005). NBER Working Paper No. w11774. Available at SSRN: https://ssrn.com/abstract=847046

Bee Yan Roberts

Pennsylvania State University ( email )

501 Kern Building
University Park, PA 16802-3306
United States
814-863-1996 (Phone)
814-863-4775 (Fax)

HOME PAGE: http://econ.la.psu.edu/Biography_Pages/VITA.0901.pdf

Mark J. Roberts (Contact Author)

Pennsylvania State University - College of the Liberal Arts - Department of Economics ( email )

513 Kern Graduate Building
University Park, PA 16802-3306
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tor Winston

U.S. Department of Justice - Antitrust Division ( email )

950 Pennsylvania Avenue, NW
Washington, DC 20530
United States
202-307-0866 (Phone)

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