Learning By Exporting: Evidence Based on Data of Knowledge Flows from Innovation Surveys in Estonia

This paper studies learning-by-exporting, based on survey data of knowledge flow indicators. Most of the earlier related papers investigate the effects of exporting on productivity of firms, and often find little evidence of learning effects. This study looks more in detail into the mechanism of these effects. It investigates whether exporting is associated with increase in intensity of knowledge flows to the firm from the firm’s clients, relative to other knowledge sources. I use measures of learning about the new technologies from two pooled innovation surveys and firm level exporting data of manufacturing firms in Estonia. Unlike the majority of earlier studies that use productivity data, I find evidence consistent with learning-by-exporting. Exporting in the past is associated with more learning from the firm’s clients in next periods.exporting, learning, knowledge transfer, Central and Eastern Europe

Home versus Host Country Effects of FDI: Searching for New Evidence of Productivity Spillovers

This paper investigates the effects of both inward and outward foreign direct investment (FDI) on productivity in manufacturing and services sectors. The main novelty is the analysis of the spillover effects of outward FDI that may occur outside the investing firms on the rest of the home country. Our results based on panel data from Estonia do not indicate much spillover effects of outward or inward FDI that are robust to different specifications of the estimated model. There is substantial heterogeneity in the findings on spillovers across different specifications of the model or sector studied.http://deepblue.lib.umich.edu/bitstream/2027.42/57200/1/wp820 .pd

The Link between Innovation and Productivity in Estonia’s Service Sectors

The emerging literature on the characteristics of innovation processes in the service sector has paid relatively little attention to the links between innovation and productivity. In this paper we investigate how the innovation-productivity relationship differs across various subbranches of the service sector. For the analysis we use the CDM structural model consisting of equations for innovation expenditures, innovation output, productivity and exports. We use data from the community innovation surveys for Estonia. We show that innovation is associated with increased productivity in the service sector. The results indicate surprisingly that the effect of innovation on productivity is stronger in the less knowledge-intensive service sectors, despite the lower frequency of innovative activities and the results of earlier literature. Non-technological innovation only plays a positive role in some specifications, despite its expected importance especially among the service firms. An additional positive channel of the effects of innovation on productivity may function through increased exports.innovation, services, productivity

Home versus Host Country Effects of FDI: Searching for New Evidence of Productivity Spillovers

This paper investigates the effects of both inward and outward foreign direct investment (FDI) on productivity in manufacturing and services sectors. The main novelty is the analysis of the spillover effects of outward FDI that may occur outside the investing firms on the rest of the home country. Our results based on panel data from Estonia do not indicate much spillover effects of outward or inward FDI that are robust to different specifications of the estimated model. There is substantial heterogeneity in the findings on spillovers across different specifications of the model or sector studied.foreign direct investment, spillovers, home country effects, productivity

Does FDI spur innovation, productivity and knowledge sourcing by incumbent firms? Evidence from manufacturing industry in Estonia

Does FDI affect productivity growth, innovation, and knowledge sourcing activities of domestic firms? This study employs detailed firm-level panel-data from Estonia’s manufacturing sector to investigate different channels through which FDI can affect domestic firms. I use instrumental variables approach to identify the effects. I find no evidence of an effect of FDI entry on local incumbents’ TFP and labour productivityg rowth in the short term. The effect on productivity does not depend on the local firms’ distance to the productivity frontier. However, there are positive spillovers on process innovation. The results show significant positive correlation between the entry of FDI in a sector and the more direct measures of spillovers in subsequent periods. This is consistent with the view that FDI inflow to a sector intensifies knowledge flows to domestic firms.http://deepblue.lib.umich.edu/bitstream/2027.42/132998/1/wp986.pd

Learning By Exporting: Evidence Based on Data of Knowledge Flows from Innovation Surveys in Estonia

This paper studies learning-by-exporting, based on survey data of knowledge flow indicators. Most of the earlier related papers investigate the effects of exporting on productivity of firms, and often find little evidence of learning effects. This study looks more in detail into the mechanism of these effects. It investigates whether exporting is associated with increase in intensity of knowledge flows to the firm from the firm’s clients, relative to other knowledge sources. I use measures of learning about the new technologies from two pooled innovation surveys and firm level exporting data of manufacturing firms in Estonia. Unlike the majority of earlier studies that use productivity data, I find evidence consistent with learning-by-exporting. Exporting in the past is associated with more learning from the firm’s clients in next periods.http://deepblue.lib.umich.edu/bitstream/2027.42/133026/1/wp1011.pd

Does FDI spur innovation, productivity and knowledge sourcing by incumbent firms? Evidence from manufacturing industry in Estonia

Does FDI affect productivity growth, innovation, and knowledge sourcing activities of domestic firms? This study employs detailed firm-level panel-data from Estonia’s manufacturing sector to investigate different channels through which FDI can affect domestic firms. I use instrumental variables approach to identify the effects. I find no evidence of an effect of FDI entry on local incumbents’ TFP and labour productivityg rowth in the short term. The effect on productivity does not depend on the local firms’ distance to the productivity frontier. However, there are positive spillovers on process innovation. The results show significant positive correlation between the entry of FDI in a sector and the more direct measures of spillovers in subsequent periods. This is consistent with the view that FDI inflow to a sector intensifies knowledge flows to domestic firms.foreign direct investment, productivity, innovation, learning

The Impact of Outward FDI on Home-Country Employment in a Low-Cost Transition Economy

The current extensive literature on the home-country employment effect of FDI focuses almost exclusively on the case of investments from high-income and high labour cost home countries. In our paper we analyse the home-country employment effect in Estonia as a lowcost medium-income transition economy. The data from the population of Estonian firms between 1995 and 2002 was studied with regression analysis and propensity score matching in order to construct an appropriate counterfactual for the firms that have invested abroad. The results indicate that in general, outward FDI had a positive impact on the home-country employment growth. Concerning direct investors (domestic firms investing abroad) and indirect investors (foreign-owned firms investing abroad), the former group had a stronger homecountry employment effect due to their smaller pre-investment size and because the subsidiaries of indirect investors are served from other locations rather than from Estonia. The positive employment effect was much stronger in the case of investments made after 1999 due to the better macro-economic performance of Estonia from the year 2000 onwards. Services firms demonstrated a stronger home-country employment effect than manufacturing firms. Our results imply that the logic of the outward investments from low-cost transition and developing economies differs from that of high-income countries.http://deepblue.lib.umich.edu/bitstream/2027.42/57253/1/wp873 .pd

Does FDI spur innovation, productivity and knowledge sourcing by incumbent firms? Evidence from manufacturing industry in Estonia

Does FDI affect productivity growth, innovation, and knowledge sourcing activities of domestic firms? This study employs detailed firm-level panel-data from Estonia’s manufacturing sector to investigate different channels through which FDI can affect domestic firms. I use instrumental variables approach to identify the effects. I find no evidence of an effect of FDI entry on local incumbents’ TFP and labour productivity growth in the short term. The effect on productivity does not depend on the local firms’ distance to the productivity frontier. However, there are positive spillovers on process innovation. The results show significant positive correlation between the entry of FDI in a sector and the more direct measures of spillovers in subsequent periods. This is consistent with the view that FDI inflow to a sector intensifies knowledge flows to domestic firms.foreign direct investment, innovation, productivity, knowledge flows

Openness and innovation performance: are small firms different?

Traditionally, literature on open innovation has concentrated on analysis of larger firms. We explore whether and how the benefits of openness in innovation are different for small firms (less than 50 employees) compared to medium and large ones. Using panel data over a long time period (1994-2008) from Irish manufacturing plants, we find that small plants have on average significantly lower levels of openness, a pattern which has not changed significantly since the early 1990s. However, the effect of ‘breadth’ of openness (i.e. variety of innovation linkages) on innovation performance is stronger for small firms than for larger firms. For small firms (with 10-49 employees) external linkages account for around 40 per cent of innovative sales compared to around 25 per cent in larger firms. Small plants also reach the limits to benefitting from openness at lower levels of breadth of openness than larger firms. Our results suggest that small firms can gain significantly from adopting an open innovation strategy, but for such firms appropriate partner choice is a particularly important issue.Open innovation; SMEs; boundary-spanning linkages; learning effects; Ireland