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[The majority of studies that focus on firm level data have found a positive causal effect of innovation to exports and vice versa. Both product and process innovation raise productivity that consequentially contribute to economic growth. Economists and researchers suggest that exporting firms become more innovative than those firms that operate only in the domestic market, because they gain experience in the foreign market. This chapter explores the impact of innovation on trade openness of emerging economies based on several models using OLS and data from international databases like EORA, ICIO and World Integrated Solutions. The results indicate that emerging economies need to improve their innovation capabilities and data collection process in order to achieve better results with regard to trade openness and integration into global value chains.]
Published: Apr 8, 2020
Keywords: Innovation efficiency; Openness index; Knowledge creation; Market sophistication; Absorptive capacity
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