| dc.description.abstract | In the Chilean business sector, research and development (R&D), innovation and productivity
indicators lag far behind the figures reported in the most advanced economies. However,
there is scarce empirical evidence on what is driving and hindering improvement in such areas.
This work contributes to clarify the relationship between R&D investment, innovation, and
labor productivity in Chilean firms by analyzing in depth the role of competition and international
trade in this process. Our ability to explore these topics is made possible by merging two
recent economic surveys and applying a microeconometric model that allows us to correct for
selection bias and endogeneity. On the one hand, the results show that competition and R&D
intensity are linked by an inverse U-shaped curve, but the estimated effects of competition on
innovation output and labor productivity turn out to be rather ambiguous. This suggests that
market structure has an impact on the incentives to innovate, but not necessarily on the firms’
innovative success. On the other hand, the results indicate that international trade can promote
innovation and productivity. More specifically, we show that being a two-way trader (i.e., a firm
that both imports and exports) enhances product innovation and labor productivity. We advance
the argument that such an advantage is based on different complementarities between importing
and exporting activities. | |
