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Firm R&D Investment and Export Market Exposure

2019-10-18

Time:10:30am - 12:00pm, Oct 18, 2019

Venue:Room 359S, Overseas Exchange Center, Peking University

Speaker:Mark Roberts

(Pennsylvania State University and NBER)

 

Abstract:

In this article we study differences in the returns to R&D investment between firms that sell in international markets and firms that only sell in the domestic market. We use German firm-level data from the high-tech manufacturing sector to estimate a dynamic structural model of a firm’s decision to invest in R&D and use it to measure the difference in expected long-run benefit from R&D investment for exporting and domestic firms. The results show that R&D investment leads to a higher rate of product and process innovation among exporting firms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting firms have a higher payoff from R&D investment, invest in R&D more frequently than firms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of firms that differ in their export market exposure. Simulating the introduction of trade tariffs we find a substantial reduction in firms’ productivity growth and incentive to invest in R&D.

 

Speaker:

 

Mark Roberts is the Professor of Economics at Pennsylvania State University and Research Associate NBER. He received a Ph.D. in 1980 and a M.A. in 1978 both from University of Wisconsin, Economics, and a B.A. from Syracuse University, Economics and Journalism in 1976. The field of research interest of professor Roberts is Applied Microeconomics and Industrial Organization. He has published in many top journals like American Economic ReviewReview of Economic Studies, and Econometrica.