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Trade and innovation in services : evidence from a developing economy

Author

Listed:
  • Iacovone, Leonardo
  • Mattoo, Aaditya
  • Zahler, Andres
Abstract
Studies on innovation and international trade have traditionally focused on manufacturing because neither was seen as important for services. Moreover, the few existing studies on services focus only on industrial countries, although in many developing countries services are already the largest sector in the economy and an important determinant of overall productivity growth. Using a recent firm-level innovation survey for Chile to compare the manufacturing and"tradable"services sector, this paper reveals some novel patterns. First, although services firms have on average a much lower propensity to export than manufacturing firms, services exports are less dominated by large firms and tend to be more skill intensive than manufacturing exports. Second, services firms appear to be as innovative as -- and in some cases more innovative than -- manufacturing firms, in terms of both inputs and outputs of"technological"innovative activity, although services innovations more often take a"non-technological"form. Third, services exporters (like manufacturing exporters) tend to be significantly more innovative than non-exporters, with a wider gap for innovations close to the global technological frontier. These findings suggest that the growing faith in services as a source of both trade and innovative dynamism may not be misplaced.

Suggested Citation

  • Iacovone, Leonardo & Mattoo, Aaditya & Zahler, Andres, 2013. "Trade and innovation in services : evidence from a developing economy," Policy Research Working Paper Series 6520, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6520
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    References listed on IDEAS

    as
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    2. Zahler, Andrés & Goya, Daniel & Caamaño, Matías, 2018. "The Role of Obstacles to Innovation on Innovative Activities: An Empirical Analysis," IDB Publications (Working Papers) 73, Inter-American Development Bank.
    3. Zahler, Andrés & Goya, Daniel & Caamaño, Matías, 2022. "The primacy of demand and financial obstacles in hindering innovation," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    4. Hongze Liang & Xiaoli Hao, 2023. "Can Service Trade Effectively Promote Carbon Emission Reduction?—Evidence from China," Sustainability, MDPI, vol. 15(17), pages 1-23, August.
    5. Kannen, Peter & Semrau, Finn Ole & Steglich, Frauke, 2021. "Green gifts from abroad? FDI and firms' green management," Kiel Working Papers 2200, Kiel Institute for the World Economy (IfW Kiel).
    6. Wen, Huwei & Chen, Wenjing & Zhou, Fengxiu, 2023. "Does digital service trade boost technological innovation?: International evidence," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    7. Machado Léo, Ricardo & Tello‐Gamarra, Jorge, 2016. "Inovac¸ão em servic¸os: estado da arte e perspectivas futuras [Innovation in services: state of the art and future perspectives]," MPRA Paper 82195, University Library of Munich, Germany, revised 29 Mar 2017.
    8. Agnieszka Malkowska & Arkadiusz Malkowski, 2021. "International Trade in Transport Services between Poland and the European Union," Sustainability, MDPI, vol. 13(1), pages 1-16, January.
    9. Ortiz, Rodrigo & Fernandez, Viviana, 2022. "Business perception of obstacles to innovate: Evidence from Chile with pseudo-panel data analysis," Research in International Business and Finance, Elsevier, vol. 59(C).
    10. Francesco Bripi & David Loschiavo & Davide Revelli, 2017. "Services trade and credit frictions: evidence from matched bank-firm data," Temi di discussione (Economic working papers) 1110, Bank of Italy, Economic Research and International Relations Area.
    11. Busom, Isabel & Vélez-Ospina, Jorge Andrés, 2017. "Innovation, Public Support, and Productivity in Colombia. A Cross-industry Comparison," World Development, Elsevier, vol. 99(C), pages 75-94.
    12. Morris, Diego M., 2018. "Innovation and productivity among heterogeneous firms," Research Policy, Elsevier, vol. 47(10), pages 1918-1932.
    13. Roberto Álvarez, 2016. "The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms," Working Papers wp428, University of Chile, Department of Economics.
    14. Shubin Yang & Chris Milner & Sandra Lancheros & Saileshsingh Gunessee, 2020. "Access to Finance, Technology Investments and Exporting Decisions of Indian Services Firms," Open Economies Review, Springer, vol. 31(5), pages 1009-1036, November.
    15. Pravakar Sahoo & Ranjan Kumar Dash, 2017. "What Drives India's Surge in Service Exports?," The World Economy, Wiley Blackwell, vol. 40(2), pages 439-461, February.
    16. Briggs Kristie, 2017. "The Impact of Innovation on Financial and Insurance Services Exports," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-10, October.
    17. International Monetary Fund, 2013. "Kuwait: Selected Issues," IMF Staff Country Reports 2013/337, International Monetary Fund.
    18. Gnangnon, Sèna Kimm, 2024. "Effects of intellectual property rights protection on services export diversification in developing countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 46(1), pages 53-89.

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    Keywords

    E-Business; ICT Policy and Strategies; Public Sector Corruption&Anticorruption Measures; Housing&Human Habitats; Commodities;
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