Export Market Participation, Investments in R&D and Worker Training, and the Evolution of Firm Productivity

22 Pages Posted: 20 Jan 2007

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

Abstract

This paper uses micro panel data for firms in the Taiwanese electronics industry in 1986, 1991 and 1996 to investigate a firm's decision to invest in two sources of knowledge - participation in the export market and investments in R&D and/or worker training - and assess their effect on the firm's future productivity. The firm's decisions to export and invest in R&D and/or worker training are modelled with a bivariate probit model that recognises the interdependence of the decisions. The effect of these investments on the firm's future productivity trajectory is then modelled while controlling for the selection bias introduced by endogenous firm exit. The findings indicate a significant interaction effect between exporting and R&D investments and future productivity, after controlling for size, age and current productivity. Firms that undertake both investment activities have significantly higher future productivity than firms that do one or neither. In addition, these firms are more likely to continue investing in these activities leading to further productivity gains. 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, Export Market Participation, Investments in R&D and Worker Training, and the Evolution of Firm Productivity. The World Economy, Vol. 30, No. 1, pp. 83-104, January 2007. Available at SSRN: https://ssrn.com/abstract=958430 or http://dx.doi.org/10.1111/j.1467-9701.2007.00873.x

Bee Yan Roberts (Contact Author)

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

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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