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Innovation and export activities in the German mechanical engineering sector : An application of testing restrictions in production analysis

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Author

Summary, in English

Since Solow (Q J Econ 70:65-94, 1956) the economic literature has widely accepted innovation and technological progress as the central drivers of long-term economic growth. From the microeconomic perspective, this has led to the idea that the growth effects on the macroeconomic level should be reflected in greater competitiveness of the firms. Although innovation effort does not always translate into greater competitiveness, it is recognized that innovation is, in an appropriate sense, unique and differs from other inputs like labor or capital. Nonetheless, often this uniqueness is left unspecified. We analyze two arguments rendering innovation special, the first related to partly non-discretionary innovation input levels and the second to the induced increase in the firm's competitiveness on the global market. Methodologically the analysis is based on restriction tests in non-parametric frontier models, where we use and extend tests proposed by Simar and Wilson (Commun Stat Simul Comput 30(1):159-184, 2001; J Prod Anal, forthcoming, 2010). The empirical data is taken from the German Community Innovation Survey 2007 (CIS 2007), where we focus on mechanical engineering firms. Our results are consistent with the explanation of the firms' inability to freely choose the level of innovation inputs. However, we do not find significant evidence that increased innovation activities correspond to an increase in the ability to serve the global market.

Publishing year

2011-08

Language

English

Pages

55-69

Publication/Series

Journal of Productivity Analysis

Volume

36

Issue

1

Document type

Journal article

Publisher

Springer

Topic

  • Economics and Business

Keywords

  • Bootstrap
  • CIS
  • Data envelopment analysis
  • Discretionary
  • Exports
  • Germany
  • Innovation
  • Mechanical engineering
  • Nonparametric efficiency estimation, technical efficiency
  • Production
  • Subsampling

Status

Published

ISBN/ISSN/Other

  • ISSN: 0895-562X