Innovation and exports in Sub-Saharan Africa: Evidence from Uganda‘s micro data

Ayoki, Milton (2019): Innovation and exports in Sub-Saharan Africa: Evidence from Uganda‘s micro data.

Abstract

This paper examines the causal effect of innovation on firm-level export performance in Uganda using World Bank Enterprise Survey and Innovation Survey data (n=762). To address endogeneity between innovation and export decisions, we employ instrumental variable strategies exploiting exogenous variation in innovation driven by (i) access to information sources, (ii) national innovation system support, and (iii) perceived obstacles to innovation. Two-stage least squares (2SLS) estimates reveal that innovation increases export share by 3.1 to 11.3 percentage points, with process innovation exhibiting stronger effects than product innovation. The impact is particularly pronounced in services (9.8 pp) compared to manufacturing (5.4 pp). Firms hindered from innovating due to financial constraints or informal sector competition exhibit export shares 8.5 percentage points lower. Policy simulations suggest that improving access to innovation information could raise innovation propensity by 35.7 percentage points, highlighting the critical role of national innovation systems in boosting intra-regional trade within COMESA.

• Item Type: MPRA Paper
• Language: English
• Keywords: Exports, process innovation, product innovation, exports, productivity, Uganda, Sub-Saharan Africa, Endogeneity, IV Estimation, COMESA, R&D, self-selection, demand shocks, patents.
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

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