The paper
This paper uses Indian firm-level data to examine how exporting and importing intermediate inputs relate to innovation. It considers new products, processes, organizational systems, and the resources firms devote to research and development.
Research findings
- Firms that export or import intermediate inputs are more likely to report innovation than firms serving only the domestic market.
- The relationship extends beyond new products to processes and systems, and to both formal R&D spending and employees’ time devoted to innovation.
Policy takeaways
- Treat access to imported inputs and export markets as part of an innovation strategy.
- Combine predictable trade policies with investment in workforce skills, so firms can make productive use of new technologies and inputs.