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This paper investigates the relationship between innovation and the export behavior of firms using data from a representative panel of Spanish firms over 1991-2002. It presents a simple theoretical model of the firm decision to export and innovate that guides the econometric analysis. Consistent with the predictions of the theoretical model, the econometric results suggest a positive effect of firm innovation on the probability of participation in export markets. The results further reveal the heterogeneous effects of different types of innovations on the firm export participation.
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