Export and Innovation in Sub-Saharan Africa

Our study seeks to examine the bi-directional relationship between innovation and exporting in four countries in Sub-Saharan Africa. We hypothesize that there is a positive relationship between innovation and subsequent exporting, and that this relationship is mediated by market creation. We also hypothesize that there is a positive relationship between exporting and subsequent innovation, with customer feedback mediating this relation. We analyze firm-level data from a repeated cross-sectional survey design from the 2006/07 and 2013 World Bank Enterprise Surveys and 2013 Innovation Follow-up survey. Our results show that the relation between innovation and subsequent exporting is positive and significant. However, we find a positive but non-significant relation between exporting and subsequent innovation. These relations broadly nuance a bi-directional relationship between innovation and exporting. Furthermore, we find that market creation significantly mediates about 32.5% of the effect of innovation on subsequent exporting. Similarly but to a much larger extent, customer feedback is found to significantly mediate about 67.4%of the effect of exporting on subsequent innovation.