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Heterogeneous Firms, Exporting, Innovation and Productivity

【Authors】
YI Jingtao, MENG Shuang
【WorkUnit】
Renmin University of China
【Abstract】

This paper investigates the relationship among exporting, innovation and productivity in trade framework of heterogeneity firms. Based on the analysis on monopolistic competition model of heterogeneous firms, we establish a dynamic structural model on exporting, innovation and productivity evolution and further develop an empirical model. Using the firm-level data of the Chinese electronics industry during 2005-2007, we apply biprobit and nonlinear least square estimation to do the empirical research. The results show that exporting and innovation are found to have a jointly positive effect on the plant's future productivity. Productivity, capital stock, labor inputs and export market shocks are the heterogeneous motives of self-selection. And the return of any investment in exporting or R&D will increase as the productivity increases so that firms with higher productivity will self-select into the investment to obtain higher profits. This research confirms the hypotheses of self-selection, learning-by-exporting and productivity dynamics from theoretical and empirical perspectives and has significant implications for China's export and innovation policies.

【KeyWords】
Firm Heterogeneity, Exports, Innovation, Productivity


JEL:F14,O31,D24