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CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University Papers in Innovation Studies, CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University

No 2013/22:
Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on their R&D?

Olof Ejermo () and Karin Bergman ()

Abstract: While the distinction between manufacturing and services becomes increasingly blurred to some observers, we find, using a panel of Swedish firms, clear evidence that foreign sales (exports) are more important than domestic sales for stimulating R&D. This is particularly clear for manufacturing and this importance of foreign sales has increased over time, simultaneous to an opening up of the Swedish economy. Even though service industries have seen an increase in both R&D and trade over time, it is thus mainly manufacturing that has benefited from increased possibilities for absorptive capacity. This result suggests a clear dichotomy between manufacturing and services in terms of how they react to trade and how they turn towards the foreign market vs. the domestic market to find stimuli for innovation

Keywords: Research and Development; Foreign and domestic sales; services; manufacturing; (follow links to similar papers)

JEL-Codes: D22; F14; F43; L60; L80; O14; O31; O33; O52; (follow links to similar papers)

22 pages, June 15, 2013

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