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The Dynamic Impact of Exporting on Firm R&D Investment

Author

Listed:
  • Maican, Florin G

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Orth, Matilda

    (Research Institute of Industrial Economics (IFN), Stockholm)

  • Roberts, Mark J

    (The Pennsylvania State University and NBER)

  • Vuong, Van Anh

    (Maastricht University)

Abstract

This article estimates a dynamic structural model of firm R&D investment in twelve Swedish manufacturing industries and uses it to measure rates of return to R&D and to simulate the impact of trade restrictions on the investment incentives. Export market profits are a substantial source of the expected return to R&D. R&D spending is found to have a larger impact on firm productivity in the export market than in the domestic market. Counterfactual simulations show that trade restrictions lower both the expected return to R&D and R&D investment level, thus reducing an important source of the dynamic gains from trade. A 10 percent tariff on Swedish exports reduces the expected benefits of R&D for the median firm by 18.6 percent and lowers the amount of R&D spending by 7.6 percent in the high-tech industries. The corresponding reductions in the low-tech industries are 20.6 and 5.5 percent, respectively. R&D adjustments in response to export tariffs mainly occur on the intensive, rather than the extensive, margin.

Suggested Citation

  • Maican, Florin G & Orth, Matilda & Roberts, Mark J & Vuong, Van Anh, 2020. "The Dynamic Impact of Exporting on Firm R&D Investment," Working Papers in Economics 793, University of Gothenburg, Department of Economics, revised Aug 2022.
    • Handle: RePEc:hhs:gunwpe:0793
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    3. Liu, Mengxiao & Wang, Luhang & Yi, Yimin, 2022. "Quality Innovation, Cost Innovation, Export, and Firm Productivity Evolution: Evidence from the Chinese Electronics Industry," MPRA Paper 113270, University Library of Munich, Germany.

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    More about this item

    Keywords

    R&D; innovation; trade; export; productivity;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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