American Economic Review Vol. 101 No. 4 2011

R&D Investment, Exporting, and Productivity Dynamics

Bee Yan Aw¹; Mark J. Roberts²; Daniel Yi Xu³

¹ Department of Economics, The Pennsylvania State University, 501 Kern Building, University Park, PA 16870. · ² Department of Economics, The Pennsylvania State University, 513 Kern Building, University Park, PA 16870, and National Bureau of Econmic Research. · ³ Department of Economics, New York University, 19 West Fourth Street, Sixth Floor, New York, NY 10012, and National Bureau of Economic Research.

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.

DOI

10.1257/aer.101.4.1312

Volume

101

Issue

4

Pages

1312-1344

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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