The Relationship Between R&D and Exports in Goods and Services of Firms in the Netherlands: An Empirical Analysis

Abstract

This study investigates the relationship between R&D investments and exports of firms in the Netherlands. The results reveal complementarity between these two activities. The channel from exports to R&D appears to be stronger than the other way around. Comparing sectors, the results point out that complementarity is particularly salient among non-manufacturing firms. Differences in this relationship are also found by the type of export: service exports and R&D reinforce each other, whereas in the case of goods exports a positive effect was observed only from exports to R&D, but not in the opposite direction. Furthermore, exports of domestically produced goods (as opposed to re-exports), and exports to non-EU countries (as opposed to exports to EU countries), are found to be strongly positively related to R&D investments. Finally, looking across firm characteristics we conclude that (i) investing in R&D has higher returns in terms of export value for more productive firms; (ii) SME firms investing in R&D get more returns in terms of export than larger firms; (iii) export activities have a stronger effect on R&D investments for larger firms. Overall, our findings highlight the importance of considering spillover effects between R&D investments and export activities in designing policies related to R&D and international trade.