Internationalization, Innovation, and Productivity

International economics research has emphasized the role of trade—imports and exports—as an important mechanism for technology flows and innovation across borders and a source of productivity growth both at the country and firm level. Empirical studies primarily have focused on understanding the relationship between exports and productivity at the firm level. Recent research has started to investigate the link between international trade and firm-level innovation activity more broadly. This chapter focuses on the complex relationship between firm internationalization strategies and their innovation behavior and links these to productivity as a measure of firm performance. In particular, it focuses on the dynamic relationship between imports, innovation, and exports, and highlights several fruitful avenues for advancing this research agenda.