Investment in research and development and export performances of Canadian small and medium-sized agri-food firms

The objective of this study is to analyze the impact of research and development (R&D) investment on the export performance of Canadian agrifood small and medium-sized enterprises (SMEs) and on that of related sectors, namely, the textile and clothing sector and the manufacture of leather goods and similar products. First, we analyzed explanatory factors for R&D expenses, and then, we analyzed the impact of R&D on extensive (market access) and intensive (trade value) margins of trade using a difference-in-differences approach. We used data obtained from the Statistics Canada's National Accounts Longitudinal Microdata File (NALMF) for 2010–2015 and the Trade by Exporter Characteristics (TEC) database. The size of firms and their support from the Canadian government affect their propensity to invest in R&D and the amount of R&D expenses and their intensity, measured as the ratio of R&D to sales of goods and services. Overall, our results show that investment in R&D has a positive impact on the export performance of agrifood SMEs; the impact is smaller when the destination is one of the states in the United States.