Abstract
The aim of this study is to explore the impact of R&D investment on high tech exports in Pakistan - a developing and emerging economy. To testify such relationship, data are collected from firms’ financial statements, World Bank data base and State Bank of Pakistan data source. Time span of study is consisting of 20 years from 1995 to 2014. By using ordinary least square with robust standard error, along with several macroeconomic control variables, we found significantly positive relationship between R&D investment and high the exports. According to the product life cycle theory of international trade, innovative activities help to create competitive advantage which is essential for competing in worldwide markets. The empirical results show that R&D investment creates new products, which can attract foreign customers and creating export opportunities.
Highlights
High technological products largely depend upon innovation that leads to product development and growth
The purpose of this study is to identify the effect of R&D investment on high tech exports in Pakistan
Results are leads us to same direction i-e. 1% increase in the revenue related to taxes on foreign trade will reduce high tech exports by 2.58%
Summary
High technological products largely depend upon innovation that leads to product development and growth. High tech products involve skillful labor, sophisticated technology and high cost. Three approaches are used in high tech production; sector approach, product approach and patent approach. Sector approach is based upon intensity of technology. While product approach linked with trading of high tech products. Intellectual property rights (IPR) is a platform through with firms can contribute innovations (Ismail, 2013). According to the Russian Classification of Economic Activities, high tech industries consist of Arms and ammunition production, Production of engines and turbine other than aircraft, Automobile and motorcycle engines, Production of centrifuges, calendars, and vending machines, Manufacturing of nuclear reactors and its components, Manufacturing of helipad, aircraft, and other flying machines, Manufacturing of spacecraft including boosters, and Manufacturing of automobile (Frolov & Lebedev, 2007)
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