Abstract:

Posner’s (1961) “technological gap theory” and Vernon’s (1966) “product life cycle theory” predicts that innovation causes market power and facilitates export. In other side export encourages firms and provides more affirmative environment for innovative processes. These theoretical approaches have different predictions regarding the direction of causality between export and innovation. Using Two-Step System Generalized Moments of Method this study investigates causality relationship between export intensity and R&D intensity for the period 2008-2013 in Turkish Manufacturing Industry. Causality relationship was modeled within two different equations and analyzed by Wald Test. First equation models export intensity as function of R&D intensity and real exchange rate. In the second equation R&D intensity estimated as a function of export intensity and Herfindahl-Hirschman Index as competition variable. Causality test results show that there is unidirectional causal relationship from R&D intensity to export intensity. This finding supports the predictions of Posner’s (1961) “technological gap theory” and Vernon’s (1966) “product life cycle theory” related to the innovation and export relationship in Turkish Manufacturing Industry.

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