Financial constraints and Spanish manufacturing firms’ R&D and exporting

The aim of this paper is analysing the role of internal and external financial constraints in the firms’ joint decision to export and invest in R&D. Our empirical strategy consists of estimating a bivariate probit that explicitly acknowledges that a firm R&D and export decisions are interrelated. To proxy for internal financial constraints we use both a direct (cash-flow) and indirect measure (total factor productivity). External financial constrains are proxied using firms’ financial costs. Further, we analyse both if firms size and the onset of the current economic crisis have an impact on the relationship between financial constraints and firms’ R&D and export decisions. Using a representative sample of Spanish manufacturing firms for the period 1990-20010, we find that both internal and external finance constraints are relevant for the two firms’ strategic decisions analysed.