R&D, Export, and Investment Decision
Title | R&D, Export, and Investment Decision |
Publication Type | Working Paper |
Year of Publication | 2016 |
Authors | Carboni, OA, Medda, G |
Number | 2016_05 |
ISBN Number | 978 88 8467 973 4 |
Keywords | export, IV model, r&d |
Abstract | This paper provides an empirical analysis of the mechanism through which R&D and export influence investment decision. The analysis is based on a large representative and cross-country comparative sample of manufacturing firms across seven European countries. To control for reverse causality between export decision and R&D spending and investment, we use an instrumental variable analysis to overcome the problem of endogeneity. Employing a three step procedure, it is assumed that R&D decision is endogenously determined by receiving public subsidies, and, in turn, affect investments through its impact on engagement by the firm in international trade. The results suggest that R&D positively affects export propensity. We find that there is an average increase in propensity to invest for those firms which decide to engage in R&D activities. The results also reveal that the effect of decision to export on investment behaviour is positive and highly significant, when accounting for endogeneity of export activity. |
Citation Key | 6564 |
Attachment | Size |
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WP16-05.pdf | 1.48 MB |