International Journal of Economic Issues vol:3 issue:2 pages:261-299
We study the determinants of bilateral export performance within 11 Europan Union member states. Although this paper focuses on the role of technological innovation, as measured by R&D expenditures and patent grants in the U.S. market, it also takes into account alternative explanations of trade. Technological performance is measured relative to both the destination market and other European competitors. The findings show that bilateral export performance can be explained by a combination of factors. Innovation appears to be important at the overall level and for high-tech sectors in general. We obtain, however, only limited evidence that innovation improves export performance within individual manufacturing sectors. The latter causes doubts about sector-specific innovation strategies. Instead an overall stimulation of innovation seems a more appropriate policy, in particular in times of economic crisis.