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  3. American Economic Review
  4. June 2011
  5. R&D Investment, Exporting, and Productivity Dynamics

R&D Investment, Exporting, and Productivity Dynamics

  • Bee Yan Aw
  • Mark J. Roberts
  • Daniel Yi Xu
American Economic Review
vol. 101, no. 4, June 2011
(pp. 1312-44)
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Abstract

This paper estimates a dynamic structural model of a producer's decision to invest in R&D and export, allowing both choices to endogenously affect the future path of productivity. Using plant-level data for the Taiwanese electronics industry, both activities are found to have a positive effect on the plant's future productivity. This in turn drives more plants to self-select into both activities, contributing to further productivity gains. Simulations of an expansion of the export market are shown to increase both exporting and R&D investment and generate a gradual within-plant productivity improvement. (JEL D24, F14, G31, L63, O31, O33)

Citation

Aw, Bee Yan, Mark J. Roberts, and Daniel Yi Xu. 2011. "R&D Investment, Exporting, and Productivity Dynamics." American Economic Review, 101 (4): 1312-44. DOI: 10.1257/aer.101.4.1312

Additional Materials

JEL Classification

  • D24 Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
  • F14 Country and Industry Studies of Trade
  • G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
  • L63 Microelectronics; Computers; Communications Equipment
  • O31 Innovation and Invention: Processes and Incentives
  • O33 Technological Change: Choices and Consequences; Diffusion Processes