TY - JOUR ID - 60861 TI - The Effect of Innovation on International Trade: Selected Medium-High-Technology Industries, Evidence on Iran+3 JO - Iranian Economic Review JA - IER LA - en SN - 1026-6542 AU - Ghanbari, Abdollah AU - Ahmadi, Marzieh AD - Department of Economics, Isfahan University, Isfahan, Iran. Y1 - 2017 PY - 2017 VL - 21 IS - 1 SP - 21 EP - 44 KW - Keywords: R&D KW - Innovation KW - International Trade KW - Gravity Equation. JEL Classifications: F10 KW - O31 KW - F4 KW - L6 DO - 10.22059/ier.2017.60861 N2 - The relationship between technology and international competitiveness dates back to the neo-technological trade theories of the 1960s. This approach considers difference in technology as the primary motive for difference among nations in terms of trade performance. The technology gap approach emphasizes inter-country differences in innovativeness as the basis for international trade flows. The gravity equation is the most successful and celebrated empirical model in international Trade. The empirical gravity literature does not include any form of multilateral resistance in the analysis. The importance of using fixed effects to control for country-specific characteristics has been emphasized in an influential paper by Anderson & Van Wincoop (2003). This paper investigates the effect of innovation on international trade. It examines the impact of R&D as a proxy of innovation on three medium high-tech industries exports in Iran, Japan, Korea and Australia using panel data method over a period of 10 years. We incorporate an industry-specific intercept into the model for estimating the role of innovation in explaining industry-level trade across selected countries. Our findings show that innovation has a positive and economically large effect on export performance of all industries. This suggests innovation is a central driver of trade. UR - https://ier.ut.ac.ir/article_60861.html L1 - https://ier.ut.ac.ir/article_60861_0d9cc4b830c843d9c4dc1b237a8eff12.pdf ER -