From Export to Innovation : Evidence from Chinese Listed Firms

Will export affect corporate innovation? Using comprehensive data from 2002 to 2016, we find that Chinese firms file more patents in response to international demand. To establish causality, we explore exogenous shock in exchange rate policy in 2005, which converts from a fixed regime into a managed floating regime. After the policy shock, multinational firms increase more innovation than their domestic peers. Moreover, the improved innovation is more pronounced amongst firms with high financial constraints and located in places where talents, technological resources, institutional environment are more favorable. Our research highlights the positive effect of exporting on corporate innovation