The Relationship Between Innovation, Productivity and Exports: Some Preliminary Evidence from the Malaysian Manufacturing Sector

The objective of this paper is to empirically examine the relationship between innovation, productivity and trade intensity using firm-level data from the Malaysian manufacturing sector. Evidence from this paper suggests the relationships between innovation, productivity and exports is a complex one. Exporting and industry technological characteristics may influence the decision to undertake R&D but has no effect on R&D expenditure. Only firm size has impact on both the decision and expenditure on R&D. Variables such as R&D expenditure, firm size, exports and local ownership influences the propensity to innovate, be it product or process innovation. Product innovation is negatively related to productivity while process innovation is positively related to productivity.