This study investigates the effect of innovation on foreign trade in European countries for the period of 2000-2017 using panel data methods. R&D intensity was used as an indicator of innovation, and export intensity, import intensity and the ratio of exports to imports were considered as foreign trade indicators. Considering the results of unit root tests indicating the nonstationary of the variables and the heterogeneity of parameters across countries, the relationship between innovation and foreign trade variables was examined by using Westerlund (2007) HDM cointegration test and Pesaran (2006) CCEMG model. Westerlund (2007) HDM cointegration test showed that innovation and all three foreign trade variables are cointegrated. Among the models estimated for exports, imports, and the ratio of exports to imports within the framework of Pesaran (2006) CCEMG method, it was found that innovation affects foreign trade only in the first model. These findings supports that innovation influences exports positively in both the long and short run. However, innovation did not influence imports and the ratio of exports to imports. Furthermore, the CCEMG model showed that the relationship between innovation and foreign trade variables varies across countries, while this relationship was not supported for Turkey. The results indicate that although there are differences across countries, when setting policy targets for export growth, they should also consider measures to support innovation. It is thought that such a preference will contribute to the innovation and technological capability accumulation that support permanent competitive advantage.
: Innovation Foreign Trade Panel cointegration CCEMG Estimators European Countries Innovation
Primary Language | Turkish |
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Journal Section | Articles |
Authors | |
Publication Date | September 30, 2022 |
Submission Date | October 1, 2021 |
Published in Issue | Year 2022 Volume: 40 Issue: 3 |
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