Direct and indirect effects of innovation on export supply in selected developing and developed countries: Simultaneous equations approach

Exports as the engine of the economy plays a role in global markets, because export take advantage of global markets to provide manufacturing firms and lift market restrictions on domestic manufacturing firms and the use of economies of scale. So the aim of this study is to evaluate the effect of innovation on exports of selected developing and developed countries over the period 2007-2012 using panel data approach and by estimating Seemingly Unrelated Regression (SUR) for a system of simultaneous equations. According to the general export equation estimations indicate that in developing countries, Global Innovation Index and GDP coefficients are positive and significant and the coefficients of governance and accumulation of FDI inflows is positive and meaningless and in developed countries, coefficients of accumulation of FDI inflows , Global Innovation Index, GDP and governance is significantly positive. However, the indirect effects of innovation on exports indicate that indirect effects such as direct effects of both developing countries and developed countries are positive. It is noteworthy that a significant portion of GII effects on export in developed countries is applied by indirect mechanism (the channels of GDP, FDI and governance index) but in developing countries, the reverse situation is observed .