| Summary: | This paper provides support for the view that there should be a close link between inno-vation and export performance. In essence it is argued that successful exporting requires penetration of a market through an innovation process. For a small country like Sweden depending on production of knowledge intensive goods and product competition, to re-tain its international competitiveness, this notion is likely to hold true. Against this background an analysis aimed at testing to what extent Swedish export capacity can be determined by innovation is presented. In addition the factors perceived as influencing this capacity are identified and their relative importance is assessed. Specifically patent and R&D data are treated as the main proxies for innovation activity. Moreover the rela-tive export and innovation performance among the Swedish municipalities is analyzed. A spatial version of the product cycle model is introduced as it explicitly captures the process of innovation, relocation and export dynamics and forms a link to the succeed-ing theorizing. In particular it suggests that certain regions are more likely to be the lo-cation for innovative exporting firms due to advantageous intrinsic favorable attributes specific to these locations. In the specified model such attributes that are assumed to in-fluence export capacity in the Swedish municipalities are defined as local, intra- and in-terregional accessibility to research, average number of patents and density of employ-ment. Regression results suggest that accessibility to research from within the munici-pality exerts the principal effect on export and innovation capacity. Moreover the influ-ence of accessibility to industry R&D dominates over the university variable in both re-gressions, with total and per kilogram export value as dependents. In addition regional size exerts a rather strong positive effect on total export value.
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