Importing, Exporting, and Innovation in Developing Countries

Abstract

Several recent studies have shown that not only exporters but also importers perform better than firms that do not trade. Using a detailed firm level dataset from 43 developing countries, I show that there are persistent differences in evolution of firms when they are grouped according to their trade orientation as: two-way traders (both importing and exporting), only exporters, only importers, and non-traders. Extending the existing models of firm evolution in open economies by incorporating importing decision, I provide a simple model and empirically show that: i) globally engaged firms are larger, more productive, and grow faster than non-traders; ii) two-way traders are the fastest growing and most innovative group who are followed by only-exporters; and iii) estimating export premium without controlling for import status is likely to overestimate the actual value by capturing the import premium. Finally I show the robustness of the findings by providing evidence from the panel data constructed from the original dataset and controlling for variables that are likely to affect firm growth.

Outsourcing, Importing and Innovation: Evidence from Firm‐level Data for Emerging Economies

“…The papers by Gorodnichenko et al (), Correa et al (), Crinò () and Seker () also use BEEPS data to investigate various aspects of innovation activity in emerging countries. The main difference in our paper is that we consider firm‐level information on outsourcing, which is not being done in the other studies.…”

“…Gorodnichenko et al () consider the effects of foreign competition, exports and imports on innovation. Seker () differentiates exporters, importers and firms doing both and relates these to innovation. Correa et al () investigate determinants of technology absorption.…”

Importing, Exporting, and Innovation in Developing Countries

“…1 1 A more detailed explanation of the model and derivation of the equations is presented in Şeker (2011). …”

“…6 6 All analysis results that are not presented because of space limitations are available in Seker (2011). …”

Firm Heterogeneity and Export Pricing in India

“…Mukim (), although focused on the effect of exporting on productivity rather than the effect of productivity on exporting, and not directly estimating firm productivity, has considerable suggestive evidence that for India (as for virtually all other countries studied with firm‐level data), high productivity firms are more likely than low productivity firms to export. See Seker () for further global evidence on this point.…”