Does knowledge spill to leaders or laggards? Exploring industry heterogeneity in learning by exporting

In recent years the international trade literature has focused on the effects of exporting and its benefits in an open economy. Scholars note that engaging in trade enhances knowledge spillovers, and results in income growth and income convergence among trading partners. Although the macro-literature has long addressed economic convergence, there has been relatively little research examining the effect of exporting on ex post firm performance. Likewise, there has been little research that examines the differential learning-by-exporting effects across industries. In this paper we build upon the convergence literature to argue that engaging in exporting provides firms, especially firms in technologically lagging industries, the opportunity to benefit disproportionately from knowledge spillovers. Using a sample of Spanish manufacturing firms from 1990 to 1997, we investigate empirically how exporting differentially influences the innovative outcomes of firms in technologically leading vs lagging industries. We find evidence that firms in technologically lagging industries (in which Spain lags the global technology frontier) learn more from exporting than those firms in technologically leading industries (in which Spain is at, or near, the global technology frontier). The results enrich the traditional convergence argument by suggesting that industry heterogeneity matters to knowledge transfer, and stands to play a substantial role in reducing knowledge gaps.