Innovation and Export Volumes and Prices--A Disaggregated Study

This paper explores the role of innovation in the determination of both net exports and export prices. The analysis is conducted for thirty-six industry groups covering both manufacturers and services in the United Kingdom. The data are annual time series and these are analyzed using the techniques of cointegration to establish the existence of significant time-series relationships between innovation and trade performance. Innovation was measured by survey data and by patent statistics. The empirical findings support the view that successful R&D has a quantitatively significant impact on the balance of trade in a variety of industries and services. Copyright 1994 by Royal Economic Society.