Prague Economic Papers 2021, 30(2):216-244 | DOI: 10.18267/j.pep.755

Do FDI and Patents Drive Sophistication of Exports? A Panel Data Approach

Seren Ozsoy ORCID...a, Burcu Fazlioglu ORCID...b, Sinan Esen ORCID...c
a Sakarya University, Sakarya Business School, Sakarya, Turkey
b School of Economics and Administrative Sciences, TOBB ETU, Ankara, Turkey
c University of Sakarya Applied Science, School of Applied Sciences, Sakarya, Turkey

This paper investigates whether inflows of FDI and innovative activities act as a channel of knowledge spillovers in improving quality of countries' output. In measuring export quality, sophistication of a country's export basket is utilized. Utilizing panel data of countries for the period 2002-2015 and applying GMM methodology, the results indicate that the level of financial development, the quality of human capital and globalization of a country have a determinant role on the relation between knowledge spillover channels and the quality of exports. Patent applications generally positively affect sophistication of exports. FDI serves as a channel for knowledge spillovers to benefit the sophistication level of exports only for developed, more educated, financially developed and globalized countries.

Keywords: Knowledge spillovers, sophistication of export, patent applications, FDI
JEL classification: F14, F21, F41, O10, O30

Received: April 15, 2019; Revised: March 4, 2020; Accepted: May 7, 2020; Prepublished online: June 24, 2020; Published: April 14, 2021  Show citation

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Ozsoy, S., Fazlioglu, B., & Esen, S. (2021). Do FDI and Patents Drive Sophistication of Exports? A Panel Data Approach. Prague Economic Papers, 30(2), 216-244. doi: 10.18267/j.pep.755
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