American Economic Review: Vol. 101 No. 4 (June 2011)


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R&D Investment, Exporting, and Productivity Dynamics

Article Citation

Aw, Bee Yan, Mark J. Roberts, and Daniel Yi Xu. 2011. "R&D Investment, Exporting, and Productivity Dynamics." American Economic Review, 101(4): 1312-44.

DOI: 10.1257/aer.101.4.1312


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. (JEL D24, F14, G31, L63, O31, O33)

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Aw, Bee Yan (PA State U)
Roberts, Mark J. (PA State U)
Xu, Daniel Yi (NYU)

JEL Classifications

D24: Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
F14: Country and Industry Studies of Trade
G31: Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
L63: Microelectronics; Computers; Communications Equipment
O31: Innovation and Invention: Processes and Incentives
O33: Technological Change: Choices and Consequences; Diffusion Processes

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