Sources of Learning-by-Exporting Effects: Does exporting promote innovation?

This paper examines whether first-time exporters achieve productivity improvements through learning-by-exporting effects. The results suggest that the start of exporting to North America/Europe has a strong positive effect on sales and employment growth, R&D activity, and productivity growth. On the other hand, the start of exporting to Asia does not have any strong productivity-enhancing effects, although it does tend to boost the growth rates of sales and employment and to be associated with an increase in R&D expenditure. However, even considering these variables, the positive impact from the start of exporting to North America/Europe is much larger. Further analysis shows that export starters to North America/Europe are larger, more productive, more R&D intensive, and more capital intensive than export starters to Asia even before they start exporting, suggesting that the former are potentially better performers than the latter. Moreover, export starters to North America/Europe become more innovative than export starters to Asia after the start of exporting. The results obtained here imply that potentially innovative non-exporters should be supported through an export-promotion policy.