Does innovation matter for Chinese hightech exports? a firm-level analysis

This paper analyzes the role of innovation activities in the export participation of Chinese high-tech firms during the period of 2005-2007. Using a parametric, instrumental variable approach and a non-parametric matching method, we find that firm-level innovation efforts, measured by R&D and product innovation dummies, play only a minor role for domestic exporters. Foreign-invested firms dominate the high-tech exports but do not rely on indigenous innovation activities. These results thus confirm prior findings that the success of Chinese high-tech exports does not result from heavy R&D expenditure and technological progress. Moreover, different types of innovation measures show different impacts on the likelihood of exporting. The impacts of innovation on exporting vary widely across industries and provinces.