Firm exports, innovation, and the regional dimension in Spain

Abstract

Firm-level data are used to estimate the effect of product and process innovations on firms' exports in each Spanish NUTS-2 region. Results show that the effect of innovation on exports is far from regionally uniform. The gap in the propensity to export between innovative and non-innovative firms, conditional to other sources of firm heterogeneity, is shown to be particularly wide in regions with a high extensive margin of exports. An immediate implication is that policies aiming at stimulating innovation, which are likely to be effective in increasing the number of exporting firms, will not exert the same effect in all regions.