This paper analyses the effect of innovation on the well-established productivity-export association in the literature …. Here, we argue that actively innovative firms have a higher productivity, which make them more likely to become exporters … further, which may facilitate future productivity. We use the micro-data from two waves of Swedish Community Innovation Survey …

. In the model, firms are heterogeneous in productivity. Selection effect and agglomeration economies caused by … agglomeration increase firms' productivity and decreases industrial entry costs, and factor prices are increased because of … shows that the compositive effect is that the influences of productivity on the latter increase with agglomeration level …