Learning-by-exporting and innovation strategies

Abstract

We examine the combined effect of exports, innovation and external knowledge on total factor productivity growth among manufacturing firms. This paper distinguishes between frequent and temporary exporters as well as between frequent and temporary innovators. Applying a dynamic approach on an unbalanced panel consisting of 8516 Swedish firms observed over a 12-year period, the results show that among firms with permanent presence in export markets, persistent innovators have 0.5% point higher annual productivity growth than non-innovative exporters and 0.4% higher growth compared to firms that switch between being innovative or not. A similar pattern is found for the group of companies that alternates between exporting and non-exporting; however, the differences in growth rates are not statistically significant. We also show that only persistently innovative exporters and exporters with a large fraction of exports in their sales benefit from their presence in the local milieu with high knowledge intensity.