The Effect of Innovation on Agricultural and Agri-food Exports in OECD Countries

This paper investigates the effect of innovation on primary agricultural and processed food product exports among the Organization for Economic Cooperation and Development (OECD) countries. A theoretical gravity equation that accounts for innovation is derived. The empirical exercise uses panel data sets covering 21 OECD countries for the period 1990-2003. The R&D capital stock is employed as a tangible way of measuring innovation. Empirical results show that R&D has enhanced exports in the primary agricultural sector. Meanwhile, the market expansion effect of R&D appears to be more than offset by the market power effect in the food processing sector, resulting in a decrease in exports. Also, evidence was found of a positive vertical channeling effect through which R&D in the primary agricultural sector increases exports of processed food products.
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Ghazalian, Pascal L.; Furtan, William Hartley, The Effect of Innovation on Agricultural and Agri-food Exports in OECD Countries, Journal of Agricultural and Resource Economics, Volume 32, Issue 3, December 2007, Pages 448–461

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