TY  - JOUR
AU  - Gorodnichenko,Yuriy
AU  - Schnitzer,Monika
TI  - Financial constraints and innovation: Why poor countries don't catch up
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15792
PY  - 2010
Y2  - March 2010
UR  - http://www.nber.org/papers/w15792
L1  - http://www.nber.org/papers/w15792.pdf
N1  - Author contact info:
Yuriy Gorodnichenko
Department of Economics
508-1 Evans Hall #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: ygorodni@econ.berkeley.edu

Monika Schnitzer
Department of Economics, University of Munich,
Akademiestr. 1/III,
80799 Munich, Germany
E-Mail: schnitzer@lrz.uni-muenchen.de
AB  - This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey data which provides direct measures for innovations and firm-specific financial constraints. We find that financial constraints restrain the ability of domestically owned firms to innovate and export and hence to catch up to the technological frontiers. This negative effect is amplified as financial constraints force export and innovation activities to become substitutes although they are generally natural complements.
ER  -