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Firm R&D Investment and Export Market Exposure

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  • Vuong, Van Anh
  • Peters, Bettina
  • Roberts, Mark

Abstract

In this paper, we estimate a dynamic structural model of a rm s decision to invest in R&D and use it to measure the expected long-run bene t from R&D investment. We apply the model to German rms in ve high-tech manufacturing industries and distinguish rms by whether they sell in just the domestic market or also export some of their production. We nd that R&D investment leads to a higher rate of product and process innovation among exporting rms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting rms have a higher payo from R&D investment, invest in R&D more frequently than rms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of rms that di er in their export market exposure.

Suggested Citation

  • Vuong, Van Anh & Peters, Bettina & Roberts, Mark, 2015. "Firm R&D Investment and Export Market Exposure," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112938, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:112938
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    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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