Title: Empirical analysis of innovation and trade in Europe: a gravity model approach

Authors: Konstantin Kunze

Addresses: University of Colorado Denver, 1380 Lawrence Street, Denver, CO 80204, USA

Abstract: This paper examines the relationship between innovation and trade in Europe. Applying the gravity model R&D expenditures and patent counts, both subdivided into sectors have been used as proxies for innovation. The results imply that innovation is a significant determinant for imports and exports; however, this relationship is not significant in every sector. Furthermore, the results suggest that innovation-output, captured by the number of patents, is associated with bigger effects on trade than innovation-input, in the form of R&D expenditures. The robustness tests indicate that endogeneity does not bias the results.

Keywords: innovation; patents; R&D expenditure; exports; imports; gravity model; research and development; trade; Europe.

DOI: 10.1504/IJTGM.2016.077847

International Journal of Trade and Global Markets, 2016 Vol.9 No.3, pp.197 - 211

Received: 26 May 2015
Accepted: 26 Sep 2015

Published online: 17 Jul 2016 *

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