INNOVATION AND EXPORT VOLUMES AND PRICES - A DISAGGREGATED STUDY

The paper explores the role of innovation in the determination of both net exports and export prices. The analysis is conducted for 36 indus try groups covering both manufacturers and services in the UK. The dat a are annual time series and these are analysed using the techniques o f co-integration to establish the existence of significant time-series relationships between innovation and trade performance. Innovation wa s measured by survey data and by patent statistics. The empirical find ings support the view that successful R&D has a quantitatively signifi cant impact on the balance of trade in a variety of industries and ser vices.