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IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper explores how firm-specific trade opportunities affect R&D investments and innovative activities. To construct trade opportunities that are exogenous to firm-level decisions, I use the variation in export and import patterns and exploit the fact that firms differ in their product-country exporting (sourcing) patterns. Both export and import opportunities generate growth in terms of sales, value-added, overall employees, and high-skilled employees. Despite having similar effects on firm growth, the effects on innovation activities are very different for the two trade shocks. Export opportunities lead to more R&D investments (spending, employees, and intensity) and innovations (product and process). On the other hand, import opportunities show no effects on R&D investments, and the impact on product, process, and service innovation is negative.

Keywords: R&D; Innovation; International; trade; Export; Import

JEL-codes: F10; F14; O31; O32

Language: English

36 pages, August 29, 2025

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