Three essays on Innovation and Agrifood Trade
Thèse
Aristide Bonsdaouende Valea
Doctorat en agroéconomie
Philosophiæ doctor (Ph. D.)
Three essays on Innovation and Agrifood Trade
Thèse
Aristide Bonsdaouêndé Valea
Sous la direction de:
Lota Dabio Tamini, directeur de recherche Damien Rousselière, codirecteur de recherche
Résumé
Cette thèse aborde trois questions relatives à l'innovation et au commerce international agroalimentaire. Le premier essai traite des implications de la libéralisation commerciale sur la qualité et les prix des exportations agroalimentaires, tant sur le plan théorique qu'empirique. Basée sur la littérature récente en commerce international, l'investiga-tion théorique étend un modèle existant en introduisant les tarifs des outputs comme facteurs susceptibles d'impacter la qualité des exportations. Le modèle renseigne que les eets de la libéralisation commerciale sur la qualité des produits exportés dépendent fortement du niveau de diérenciation des produits. En eet, la libéralisation commer-ciale induit une amélioration de la qualité des exportations plus importante pour les produits diérenciés que pour les produits homogènes. Ces conclusions théoriques ont été testées avec des données des pays membres de l'OCDE. Les résultats empiriques corroborent en grande partie les hypothèses théoriques.
Le deuxième essai est consacré à l'analyse des eets directs et indirects (via l'inno-vation) des contraintes de nancement sur les performances à l'exportation des entre-prises agroalimentaires dans les pays africains. La littérature soutient que les contraintes de nancement impactent négativement les activités d'innovation des entreprises. Par ailleurs, l'innovation constitue un des principaux déterminants de la performance des entreprises à l'exportation. Il est alors pertinent d'envisager que les contraintes de nan-cement peuvent impacter directement les performances à l'exportation des entreprises agroalimentaires à travers la hausse des coûts liés aux activités d'exportation, mais aussi indirectement à travers la réduction des incitations des entreprises à innover. Le modèle théorique développé suggère que l'impact de l'innovation sur les performances à l'exportation dépendent de deux eets : l'eet coût et l'eet de création de demande. L'innovation ne se traduit par une amélioration des performances à l'exportation que si l'eet de création de demande est supérieur à l'eet coût. Par ailleurs, les entreprises les plus nancièrement contraintes sont moins enclines à innover et moins performantes sur les marchés étrangers. Ces conclusions théoriques ont été testées à travers des
don-nées d'entreprises agroalimentaires de 10 pays africains. De façon générale, l'évidence empirique con rme les conclusions théoriques selon lesquelles les contraintes des nan-cements sont dommageables pour les performances des exportations des entreprises. Le dernier essai de cette thèse questionne les implications des investissements en R&D dans le secteur agricole sur la durée des exportations des produits agricoles dans les pays membres de la CEDEAO. Les recherches sur la survie des exportations dans le secteur agricole sont peu nombreuses. Plus précisément, celles abordant la question des possibles eets des investissements publics R&D sur la durée des exportations sont quasi inexistantes. Au regard de l'importance et du rôle que joue le secteur agricole dans l'économie des pays membres de la CEDEAO et de la faiblesse des investisse-ments dans le secteur agricole, ce troisième essai contribue à combler ce gap. Deux mesures des investissements en R&D ont été utilisées comme variables explicatives de la probabilité de survie des exportations : la moyenne annuelle de la part des investis-sements en R&D dans le PIB agricole réalisée durant les cinq dernières années avant le début de l'épisode de commerce (investissement en amont) et la moyenne annuelle de la part des investissements en R&D dans le PIB agricole réalisée pendant l'épisode de commerce (investissement en aval). Les résultats empiriques indiquent que de façon générale, les investissements en R&D augmentent la probabilité de survie des exporta-tions des produits agricoles des pays membres de la CEDEAO. Par ailleurs, cet eet n'est pas linéaire dans la mesure où l'augmentation les dépenses en R&D tendent à réduire la probabilité de survie des exportations à partir d'un certain seuil. Les résul-tats indiquent aussi une hétérogénéité entre les pays et selon le nombre d'épisodes de commerce passés.
Abstract
This thesis addressed three issues related to innovation and agrifood trade through three essays. The rst essay deals with the implications of agrifood trade liberalization on export prices and quality upgrading, theoretically and empirically. Based on the recent literature on international trade, the theoretical investigation extends an existing model by incorporating the reduction of output taris as an indicator of trade liberalization likely to aect export quality. The theoretical model informs that the eects of trade liberalization on the quality of exported products depend strongly on the level of prod-uct dierentiation. Indeed, trade liberalization leads to more quality improvement for dierentiated products than for homogeneous products. These theoretical conclusions have been tested with data from OECD member countries. Empirical results largely corroborate theoretical conclusions.
The second essay is devoted to the analysis of the direct and indirect eects (via inno-vation) of nancial constraints on the export performance of agrifood rms in African countries. The literature argues that nancial constraints negatively impact rms' innovation activities. In addition, innovation is one of the main determinants of ex-port performance. It is therefore relevant to consider nancial constraints to directly impact the export performance of agrifood rms through increased costs related to ex-port activities, but also indirectly through the reduction of rm incentives to innovate. Our theoretical model suggests that the impact of innovation on export performance depends on two eects: the cost eect and the demand-creation eect. Innovation in-duces improved export performance only if the demand-creation eect is greater than the cost eect. Moreover, the most nancially constrained rms are less inclined to innovate and are less successful in foreign markets. These theoretical conclusions were tested on data about agrifood rms from 10 African countries. In general, empirical evidence con rms the theoretical conclusions that nancial constraints are damaging to the performance of rms' exports.
The last essay of this thesis questions the implications of R&D investment in the agricultural sector on export duration of agricultural products in ECOWAS member countries. There is little research on export survival in the agricultural sector. More precisely, those addressing the issue of the possible eects of public R&D investment on the duration of exports are almost non-existent. Given the importance and role of the agricultural sector in the economies of ECOWAS member countries and the low level of investment in the agricultural sector, this essay contributes to lling this gap. Two measures of R&D investments were used as explanatory variables for the probability of export survival: the annual average share of R&D investments in agricultural GDP in the last ve years before the start of the trade episode (upstream investment) and the average annual share of R&D investments in agricultural GDP realized during the trade episode (downstream investment). The empirical results indicate that, in general, R&D investments increase the agricultural export survival rate of ECOWAS countries. In addition, this eect is not linear as the increase in R&D expenditures tends to reduce the probability of export survival above a certain threshold. The results also indicate heterogeneity across countries and the number of past trade episodes.
Table des matières
Résumé iii
Abstract v
Table des matières vii
Liste des tableaux ix
Liste des gures x
Remerciements xiii
Avant-propos xiv
Introduction 1
0.1 What is innovation ? . . . 2
0.2 How to measure innovation ? . . . 5
0.3 Determinants of innovation. . . 6
0.4 Innovation and rm internationalization . . . 8
0.5 Bibliographie . . . 11
1 Agri-food trade liberalization, export prices, and quality upgra-ding : Evidence from OECD countries 16 1.1 Résumé . . . 16
1.2 Abstract . . . 17
1.3 Introduction . . . 18
1.4 Quality measurement and some stylized facts. . . 20
1.5 Theoretical background. . . 26
1.6 Empirical Strategies . . . 31
1.7 Results and discussion . . . 33
1.8 Conclusion . . . 39
1.9 Bibliographie . . . 41
1.10 Appendix . . . 44
2 Financial constraints, innovation and agri-food export
2.1 Résumé . . . 47 2.2 Abstract . . . 48 2.3 Introduction . . . 49 2.4 Theoretical model . . . 53 2.5 Empirical strategies . . . 60 2.6 Data . . . 62
2.7 Results and discussion . . . 65
2.8 Conclusion . . . 71
2.9 Bibliographie . . . 71
3 Agricultural R&D and export survival in ECOWAS countries 77 3.1 Résumé . . . 77
3.2 Abstract . . . 78
3.3 Introduction . . . 79
3.4 Empirical strategies . . . 83
3.5 Results and discussion . . . 89
3.6 Heterogeneous eects analyses . . . 95
3.7 Conclusion . . . 100
3.8 Bibliographie . . . 100
Conclusion 110 3.9 Bibliographie . . . 111
Liste des tableaux
1.1 Product description . . . 23
1.2 Correlation coe cient between quality and taris . . . 26
1.3 Descriptive statistics . . . 34 1.4 Initial tests . . . 34 1.5 Results-Quality equation . . . 36 1.6 Results-Price equation . . . 38 1.7 List of exporters . . . 44 1.8 List of importers . . . 45
1.9 Results-Price equation with speci c taris . . . 46
2.1 Variables descriptions and measures . . . 63
2.2 Innovation and export performance by country. . . 64
2.3 Correlation between the errors of the equations . . . 65
2.4 Results - Financial constraints and innovation . . . 67
2.5 Results - Innovation and nancial constraints eects on export performance 69 2.6 Direct and indirect eects of nancial constraints on export performance 70 2.7 Descriptive Statistics . . . 76
3.1 Descriptive statistics . . . 88
3.2 Survival function by country . . . 92
3.3 Results - Impact of R&D on export survival (All products) . . . 94
3.4 Results - Impact of R&D on export survival (PWP-TT with eects by events) . . . 97
3.5 Results - Impact of R&D on export survival (All products) . . . 99
3.6 Results - Impact of R&D on export survival (Animal products) . . . 104
3.7 Results - Impact of R&D on export survival (Vegetables) . . . 105
3.8 Results - Impact of R&D on export survival (Food products) . . . 106
3.9 Results - Impact of R&D on export survival (PWP-TT with eects by events) . . . 107
Liste des gures
0.1 GDP per capita and innovation (average level over 20022004) . . . 2
1.1 Quality distribution by product type and destination income group . . . 24
1.2 Price and quality by product type and destination income group . . . 25
1.3 Output ad valorem tari evolution by product type . . . 26
2.1 Export performance and nancial constraints by country . . . 65
3.1 R&D expenditures by country . . . 89
3.2 Estimated Kaplan-Meier survival rate : First spell and multiple spells . . 90
Je dédie cette thèse à :
ma mère Guèda Georgette Bougoum mon père Feu Nobila Alphonse Valea
mon épouse Gisèle Winninmalgde Ouédraogo ma lle Urielle Bonsdawindmalgré Valea mes frères et soeurs
La théorie sans la pratique est inutile et la pratique sans la théorie est aveugle
Remerciements
Cette thèse est l'aboutissement de plus de quatre ans de travail. Sa réalisation n'aurait pas été possible sans la participation et le soutien de certaines personnes que j'ai le plaisir et le devoir de remercier à travers ces lignes.
Premièrement j'aimerais remercier mon directeur de recherche Lota Dabio Tamini et mon codirecteur Damien Rousselière pour leur disponibilité et leur accompagnement durant tout mon cursus. Leurs critiques objectives, leurs encouragements et l'esprit d'écoute et de compréhension dont ils ont fait montre m'ont permis sans aucun doute de surmonter toutes les di cultés qui se sont dressées sur mon chemin.
Mes remerciements vont également à l'endroit de ma famille et à mes amis qui m'ont accordé toute leur con ance et leur soutien moral et matériel durant cette expérience enrichissante. Plus particulièrement je voudrais dire merci à ma mère, à mon épouse et à ma lle qui ont fait preuve de sacri ce et de privation pendant ces quatre années d'absence. Quitter sa famille pour une aventure aussi périlleuse en laissant derrière soit une petite lle d'à peine deux mois réquiert beaucoup de courage et de la compréhen-sion de son épouse. Cette compréhencompréhen-sion je la lui revaudrai durant toute ma vie. Je ne saurais terminer sans montrer ma gratitude à tous les enseignants du dépar-tement d'économie agroalimentaire et science de la consommation ainsi qu'à tous mes collègues étudiants. Je remercie particulièrement Ousmane Z Traoré, Eli Sawadogo, Au-don Honvo, Audace Adantode et Aminata Diagne pour leurs observations pertinentes à certaines étapes de ce travail. Je remercie également tout le personnel d'Agrocampus France à Angers qui m'a réservé un accueil chaleureux lors de mon séjour de recherche entre février et mai 2018.
Avant-propos
The chapters of this thesis are papers that are being prepared to be submitted to peer-reviewed academic journals.
The paper in Chapter 1 was co-authored with my supervisor, Lota Dabio Tamini and my co-supervisor Damien Rousselière. I am the principal author of this paper and it will be submitted to a peer-reviewed journal as soon as it goes through some nal editing. The paper in Chapter 2 was co-authored with Damien Rousselière and Lota Dabio Tamini. It will be submitted to a peer-reviewed journal as soon as it goes through some nal editing. I am the principal author of this paper.
The paper in Chapter 3 was co-authored with my supervisor, Lota Dabio Tamini and my co-supervisor Damien Rousselière. I am the principal author of this paper and it will be submitted to a peer-reviewed journal as soon as it goes through some nal editing.
Introduction
The creation of technological innovation is one of the major challenges of modern eco-nomies in both industrialized and developing countries. Schumpeter(1934) showed that innovation is the key to economic development as in all economic spheres, innovation becomes very important, even indispensable not only for welfare increase. For Aro-cena and Sutz (2012) the positive link between innovation and development is almost a truism. This vision is supported by historical economic and social facts. Indeed, the major turning points in the evolution of humanity have all been marked by technical progress in the most important spheres of the economy. From the industrial revolution to the recent economic developments marked by the emergence of the information and digital economy, D&D has always been at the center of these technological advances. Some empirical studies also corroborate the importance of the relationship between economic development and the capacity to innovate. For instance, Fagerberg and Srho-lec (2008) show that the GDP per capita of countries and their innovation score1 are
highly and positively correlated (see Figure below).
1. The innovation score is constructed by aggregating several indicators of technological capability such as patenting, scienti c publications, ICT infrastructure, ISO 9000 certi cations and access to nancial services
Figure 0.1 GDP per capita and innovation (average level over 20022004)
Source: Fagerberg and Srholec (2008)
In the following sections, we will several measures of "innovation", present internal and external factors conditioning innovation activities conducted by rms and government. Finally, we will analyze the link between innovation and the internationalization of rms.
0.1 What is innovation ?
The term innovation is used by countless political, economic and scienti c commenta-tors as a generic term that they do not de ne at the onset, relying on one of several implicit de nitions. Schumpeter is one of the rst authors to propose a de nition of innovation. Although focused primarily on rm innovation, the de nition provided by
Schumpeter (1934) has the merit of addressing the various stages of innovation as well as its contribution to the development of the rm. According to Schumpeter, innovation is a new combination of factors of production that are made by entrepreneurs . Following Schumpeter, other authors have conceptualized innovation through more or less dierent de nitions than Schumpeter's. Urabe (1988) argued that innovation consists of the generation of new idea and its implementation into new product, process or service, leading to the dynamic growth of the national economy and the increase of
the employment as well as to creation of pure pro t for the innovative business enter-prise . This de nition highlights the process of innovation, from the creation of new knowledge to its internalization by rms to increase their pro t.
Some de nitions dierentiate between social innovation and enterprise innovation. Mul-gan (2006) de nes social innovation as innovative activities and services that are mo-tivated by the goal of meeting a social need and that are predominantly diused through organizations whose primary purposes are social . He also states that unlike social innovation, business innovation is generally motivated by pro t maximization and diused through organizations that are primarily motivated by pro t maximization . In this study, we are speci cally interested in business innovation undertaken by rms whose goal is to maximize their pro ts. Still, de nitions of (business) innovation abound asBaregheh et al.(2009) identify more than 60 de nitions. They propose a holistic and multidisciplinary de nition which considers innovation as the multi-stage process whe-reby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and dierentiate themselves successfully in their market-place .
The aforementioned de nitions of innovation are abstract and di cult to adapt for the conduct of empirical research. In the Oslo manual, the OECD provides a more empirically useful de nition which considers innovation as the implementation of a new or signi cantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations . This de nition of innovation will serve as a basis for the present research which features theoretical models about export decisions made by rms. This de nition is exible enough to entertain dierent types of innovations. These dierent forms of innovation have dierent eects on the rms' production costs. Four forms of innovation are identi ed in this manual.
Product innovation
Product innovation is the introduction of a good or service that is new or signi cantly improved with respect to its characteristics or intended uses. This includes signi cant improvements in technical speci cations, components and materials, incorporated soft-ware, user-friendliness or other functional characteristics (OECD, 2005). This form of innovation increases rm xed and variable costs. Product innovation is then possible only if the rm has the opportunity to oset this increase in costs by increasing the price of the product. It is much more market-oriented and its main objective is to meet customer needs.
Process innovation is the implementation of a new or signi cantly improved production or delivery method. This includes signi cant changes in techniques, equipment and/or software (OECD, 2005). Its main objective is to improve rm e ciency by reducing the unit costs of production. This type of innovation implies a decrease in the variable costs of the rm, but it causes higher xed costs.
Marketing innovation
The Oslo manual de nes marketing innovation as the implementation of a new mar-keting method involving signi cant changes in product design or packaging, product placement, product promotion or pricing . The goal of marketing innovation can be to better target consumer needs or to reduce consumer transaction costs by developing new trade methods (Chen, 2006).
Organizational innovation
Organizational innovation is de ned as the implementation of a new organizational method in the rm's business practices, workplace organization or external relations (OECD,2005). According to Lam(2005), this form of innovation is a reaction to tech-nological changes whereas the Oslo manual considers that it could be a prerequisite for any technological change.
Regardless of the form of innovation, it can be achieved at dierent levels. Thus, the degree of novelty of the innovation is very important insofar as the associated costs and the expected bene ts dier. The literature identi es two categories of innovations de-pending on the degree of novelty : incremental innovation and radical innovation. Despite the multitude of researches on these two categories of innovation, few have gi-ven an operational de nition of any of these categories (Dahlin and Behrens,2005). For instance, incremental innovation is de ned byNorman and Verganti(2014) as the im-provements within a given frame of solutions (i.e. doing better what we already do) while radical innovation is change of frame (i.e. doing what we did not do before) .
Dahlin and Behrens (2005) suggest that the de nitions cannot distinguish between the two types of innovation. They propose three criteria to recognize a radical innovation from an incremental innovation :
Criterion 1 : The invention must be novel : it needs to be dissimilar from prior inventions.
Criterion 2 : The invention must be unique : it needs to be dissimilar from current inventions.
To be considered as radical an innovation has to ful ll all the three criteria if no, it is only an incremental innovation. Szekely and Strebel (2013) propose to add at these two stage of innovation a third stage called "the changing game systemic innovation". This stage of innovation refers to a deep transformation in the relation and interaction between the rm and its rivals, and event its very aims (Szekely and Strebel, 2013).
0.2 How to measure innovation ?
Measuring innovation is challenging as the concept is very complex. However, the li-terature reports a wide range of more or less accurate measures to capture aspects of innovation (Dziallas and Blind, 2019; Becheikh et al., 2006; Tohidi and Jabbari,2012;
Hauser et al.,2018). An extensive meta-analysis allows Becheikh et al.(2006) to iden-tify two traditional measures of innovation including R&D and patents. These indirect measures are ex-ante and ex-post respectively. Over time, these measures proved to be inappropriate (Becheikh et al., 2006). On the one hand, R&D is an input of the inno-vation process (Rahman et al.,2015;Koh and Reeb, 2015) and tends to over-estimate innovation (Becheikh et al., 2006) as all R&D investments do not lead necessarily to knowledge production. On the other hand, using the number of patents as innovation under-estimate innovation eort. Indeed, this indicator does not take into account the unsuccessful innovation activities. Thus, it is a measure of inventions instead of inno-vation (OECD, 2005).
Given the shortcomings of traditional measures of innovation, researchers try to develop indicators to measure innovation by combining traditional indicators and other aspects of innovation to reduce to a minimum the shortcomings. However most measures of innovation used in recent years are direct indicators : innovation count and rm-based surveys (Becheikh et al., 2006; Pouwels and Koster, 2017; Hong et al., 2012).
For Becheikh et al. (2006), the innovation count indicator is constructed by collec-ting innovation data from various sources such as new product/process announcements, specialized journals, databases, etc. while the second comes from collecting data by undertaking a survey with rm managers. The latter is the one used by the European Union in his Community Innovation Survey. The world bank also introduces some of the questions related to innovation in his Enterprise Survey. These questions are detailed to distinguish between the four forms of innovation. Intrinsically, there is no one measure of innovation more relevant than the others. The use of one or another of these indica-tors depends on several facindica-tors including the objective of the study, the availability of data, the budget, etc.
0.3 Determinants of innovation
The literature identi es several factors likely to in uence innovation activities. Theses factors are more or less relevant depending on the level of the analysis. Indeed, some factors are more about rm innovation than innovation activities undertaken at the country level. At the rm level, Becheikh et al. (2006) made a rich literature review from studies between 1993 and 2003. They classify these factors in two categories : internal and external factors.
0.3.1 Internal factors
Several theoretical and empirical studies suggested many internal factors likely to in- uence the probability that rms engage in innovation activities. While some authors consider R&D as the main internal factor for innovation (Avermaete et al.,2004), others believe that it is more an indicator of innovation (Dziallas and Blind,2019) as R&D is the essence of innovation. This last argument is widely used in the literature to justify the use of R&D investments as an indicator of innovation unless there is another mea-sure of innovation. What is certain and quasi-unanimously accepted in the literature is that R&D positively impacts the probability of success of the rm innovation activi-ties (Caloghirou et al., 2004; De Fuentes et al., 2015). There are two channels through which R&D in uences innovation. The rst channel highlights the contribution of R&D investments in the creation of new knowledge within an organization. The second is the increase in the organization's absorptive capacity, but it requires that investments be directed to skills development within the organization (Tamini and Valéa,2019). Using it as an input or an indicator of innovation depends on the nature and the objective of study but also the availability of data.
Other internal factors such as size, age, the ownership structure, and the organizatio-nal structure impact rm innovation (Dziallas and Blind, 2019; Hussen and Çokgezen,
2019). Two points of view are opposed about the eect of rm size on innovation. On the one hand, some authors argue that large rms are more inclined to invest in R&D because they can amortize the costs of these investments (Cohen et al., 1996; Hussen and Çokgezen,2019). On the other hand, authors believe that the more exible and less bureaucratic in smaller rms make them more innovative than larger rms. Firm age is also an important factor that in uences innovation. Indeed, the oldest rms in a sector bene t from the experience gained and therefore are the most innovative (Huergo and
innovative as they are more risk-loving (Cucculelli,2018). There is also a debate about the impact of ownership structure on innovation. While some studies report that private rms are more innovative than state rms, others defend the opposite.
0.3.2 External factors
Hussen and Çokgezen (2019) identi ed two important external factors in uencing rm innovation activities. First, the market structure (the level of competition) seems to af-fect innovation. But there is no unanimity among researchers about the direction of this eect (positive or negative). Those who share the view that more competition increases innovation argue that the survival of rms in a competitive market largely requires the development of new products or processes (Lefouili,2015;Norbäck and Persson,2012). Conversely, other authors argue that the entry of new rms on a monopolized mar-ket reduces the pro ts of the monopoly and then, its incentive to invest in innovation activities (Gayle, 2001). The third group of researchers attempts to reconcile the two previous points of view by suggesting an inverted U-relationship between innovation and competition (Aghion et al., 2005; Tingvall and Poldahl, 2006; Bos et al., 2013;
Bonfatti and Pisano,2019). For Aghion et al.(2005) this inverted-U shape is explained by the balance between two opposite eects. Indeed, competition may increase incen-tives to innovate by increasing incremental pro t from innovation (escape-competition eect), but innovation may also be detrimental for innovation incentives for laggard rms (Schumpeterian eect). They suggested that the changes in the balance between the two eects between high and low competition rationalize the inverted-U shape. Second, the literature identi es access to nance as an important determinant of in-novation. In contrast with aforementioned determinants, there is consensus about the nature of the eect of nancial constraints. Firms facing nancial constraints are less innovative. There is a debate about reverse causality. Support for a causal link from nancial constraints to the probability that rms undertake innovation activities has been documented by Mohnen et al. (2008) and Hartono and Kusumawardhani (2019).
Savignac (2008) argued that there is endogeneitybias in estimating the incidence of nanancial constraints on innovation because rms planning to undertake innovation projects need more nance than other rms, thus increasing their nancial constraints. One the other hand, rms that have successfully undertaken innovation activities are less likely to be nancially constrained.
0.4 Innovation and rm internationalization
The globalization of the world economy made internationalization a popular growth strategy for rms. This strategy is also a necessity for rm survival (Gaur and De-lios, 2015). Internationalization is de ned as a strategy through which the rm sells its goods or services outside its domestic market (Hitt et al., 2017). One of the im-plications of rm internationalization is that innovation becomes a central element of its whole strategy. This is the reason why several studies attempted to analyze the link between a rm's internationalization and its innovation activities. In this study, we are particularly interested in the relationship between export performance of rms and innovation. Most studies reported that innovation and export performance of rms are positively and strongly correlated. However, a debate emerges when it comes to establish the direction of causality either empirically or theoretically. On the one hand, some authors argued that innovation increases the likelihood that a rm will export and increase the conditional volume of exports (Greenhalgh et al., 1994; Roper and Love,
2002; DiPietro and Anoruo, 2006; Martínez-Román et al., 2019). The mechanisms by which innovation impacts export performance are of two types. The rst mechanism nds its foundations in Melitz (2003) heterogeneous rms' model in which rms dier in their productivity. There is a selection process by which only the most productive rms are able to export. An innovation that induces an increase in a rm' producti-vity (process innovation) increases its ability to export. This mechanism is empirically supported by the result of Cassiman et al. (2010) using Spanish manufacturing rms' data. The second mechanism is related to innovations that induce product quality im-provement (product innovation). Indeed, this kind of innovation even if it can increase production cost also increases the demand from foreign markets as quality upgrading increases the probability that the product will meet international standards.
Other authors, on the other hand, consider that internationalization of rm activities increases their capacity to innovate (Lin and Lin, 2010; Salomon and Shaver, 2005;
Boermans and Roelfsema,2015). This phenomenon known as "learning by exporting" is explained by the fact that exporting rms have access to a very wide range of know-ledge through their relations with foreign rms. This knowknow-ledge makes the innovation activities of these rms relatively easier compared to rms that operate exclusively on the local market (Blalock and Gertler, 2004).
Regardless of the direction of the causality between innovation and exports, it is un-deniable that both phenomena are at the center of rms' activities in developed and developing economies particularly in the agricultural sector. This thesis addresses the
issue of innovation and agrifood trade through three essays. Indeed, recent decades have been marked by waves of negotiations and signatures of regional trade agreements. The agrifood sector has always been an important part of these negotiations as it is consi-dered to be a particular sector.
The rst essay analyzes the impact of trade liberalization on export prices and quality upgrading in the agrifood sector. Improving product quality is an aspect of product innovation and implies an increase in rm production costs. In the agrifood sector, product quality is more important than in other sectors as it is most often associated with food safety issues (Grunert, 2005) and some countries use abusive standards as non-tari barriers. Indeed, protecting consumers against the proliferation of "bad qua-lity" product is one of the arguments raised by some countries to maintain or increase abusive trade barriers. Despite the Uruguay Round provisions to improve agricultural market access, the agricultural sector remains the protected in several developed and developing countries. For instance, depending on the country, the average bound tari for the agricultural sector varies between 22.33% and 98.59% while that of the other sectors varies between 8.54% and 51.53% (Kowalski,2006). It is legitimate to ask whe-ther the preservation of the quality justi es the downward rigidity of trade barriers. In other words, does trade liberalization improve the quality of agrifood products ? This essay tries to answer this question both theoretically and empirically. The theoretical investigation is an extension of Fan et al.(2015) model by introducing the reduction of output taris as an increase in trade liberalization. This investigation concluded that reductions in both input and output taris increase agrifood product quality, particu-larly for dierentiated products. We then used trade data from OECD countries to test empirically these conclusions.
The second essay addresses the question of the impact of innovation on the export per-formance of agrifood rms in developing countries confronted to nancial constraints. Indeed, even if innovation can improve rms' performance in international markets, it requires very large investments that, in a context of credit rationing, can reduce the in-centive for rms to innovate. Exporting rms also face additional costs increasing their nancial needs. Several authors have analyzed the incidence of nancial constraints on export activities (Bellone et al., 2010; Berman and Héricourt, 2010; Manova, 2012). These authors have shown that nancial constraints hinder rm export activities, thus reducing their performance on foreign markets. Other authors have focused on how innovation activities improve rm performances in international markets. DiPietro and Anoruo (2006),Roper and Love(2002) and Greenhalgh et al.(1994) are unanimous on the positive eects of innovation on both extensive and intensive margins of trade. The
second essay addresses these two research lines in a uni ed framework by dealing with the direct and indirect eects (via innovation) of nancial constraints on export per-formance. Building on the works of Melitz (2003), Manova (2012) and Griliches et al.
(1979), we develop a theoretical model to generate hypotheses which are then tested using rm-level data from 10 developing countries. This essay is empirically innovative as it estimates a system of equations that takes into account the possible endogeneity between nancial constraints, innovation and export performance. It also uses a direct measure of severity of nancial constraints, in contrast to indirect measures which are subject to multiple interpretations as indicated by Savignac (2006).
Since the seminal work of Besede² and Prusa (2006) who found that the median dura-tion of US imports is very short, export performance is no longer seen only in terms of entry and exit but also in terms of the duration of trade relationship. Bosco Sabuhoro et al. (2006) reported the same conclusions for Canadian rms. In the recent literature, one of the most important problematic issues raised is to analyze the determinants of trade survival rate. Although several determinants are already analyzed, the impact of R&D on trade survival at the country level remains one of the less examined aspects. We addressed this problem in the last essay of our thesis by analyzing the eects on agricultural R&D on agricultural trade survival in ECOWAS countries. We focused on theses countries for four reasons. First, agriculture is the main economic activity in African countries. Indeed, it contributes to about 35% in GDP and employs more than 60% of the available workforce. Second, given that agriculture of ECOWAS countries is subject to climate hazards, the production of several agricultural products is down. R&D can play an important role in the discovery of improved climate-resilient varie-ties that could improve export performance by increasing production and productivity. Thirdly, investment in the agricultural sector seems to be very low in African countries in general and particularly in the ECOWAS countries, whereas this sector is of para-mount importance in the economies of these countries. Finally, international standards seem to have a negative impact on trade for developing countries which are not able to meet these standards. Investing in R&D is an important way to develop innovative practice and production processes to meet international standards. Quality upgrading via R&D can also enhance the trade of high value-added products. The major empirical contribution is that we estimated distinctly the eects of R&D eects of upstream and downstream R&D on trade duration and to test if the relation between trade survival rate and R&D is monotone.
0.5 Bibliographie
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Chapitre 1
Agri-food trade liberalization, export
prices, and quality upgrading :
Evidence from OECD countries
1.1 Résumé
Cet article examine l'impact de la libéralisation commerciale sur les prix et la qualité des exportations agroalimentaires dans les membres de l'OCED. L'article est novateur à deux niveaux. Premièrement, contrairement aux études précédentes, il prend en compte tous les coûts liés aux tarifs supportés par les entreprises dans un modèle théorique. L'analyse théorique suggère que lorsque les entreprises font face à une réduction des tarifs des outputs et des inputs, elles ont tendance à améliorer la qualité de leurs produits et à augmenter leurs prix. À partir des données d'exportation de 33 pays de l'OCDE, l'analyse empirique montre que la réduction des tarifs des outputs augmente la qualité des exportations, mais diminue les prix. Cependant, les eets de la réduction des droits de douane sur les prix et la qualité des inputs dépendent de la diérenciation des produits. Les résultats indiquent également que la réduction des tarifs ad valorem est plus e cace que celle des tarifs spéci ques dans une stratégie d'amélioration de la qualité des produits.
Mots clés : Libéralisation commerciale, commerce agroalimentaire, qualité, prix, coûts au commerce, OCDE.
1.2 Abstract
This article examines the impact of trade liberalization on export prices and quality. The article is innovative at two levels. First, unlike previous studies, it takes into ac-count all the tari costs faced by rms in a theoretical model. Second, it empirically tests the eects of a combination of speci c and ad valorem taris on quality improve-ment. The theoretical analysis suggests that when rms face a reduction in output and input taris, they tend to improve their export quality and increase export prices. Using export data from 33 OECD countries, the empirical analysis demonstrates that output tari reduction increases export quality but decreases prices. However, the ef-fects of input tari reduction on price and quality depend on product dierentiation. The results also indicate that reducing ad valorem taris is more e cient than a speci c tari to improve product quality.
Keywords: Trade liberalization, agri-food trade, quality, prices, trade costs, OECD.
1.3 Introduction
The importance of product quality in international trade was presented in the seminal work of Linder (1961) who explained its role in the direction of trade. According to the author, high-quality products are exported to richer countries. For authors, such as Grossman and Helpman (1991), quality is a factor of export success and, in turn, of economic development. For importing countries, the quality of agri-food products is a major concern, since it is most often associated with the issue of food security and therefore public health (Grunert, 2005). This results in the establishment of sanitary barriers, particularly by developed countries, to ensure the quality of imported pro-ducts. As argued by Wagner(2014), consumer demand for quality is also a concern for exporting rms.
Increased trade liberalization in the agri-food industry in recent years has exacerba-ted stakeholders' concerns about the quality of traded products. This results in public and private labels that provide information on the quality of products. The impact of trade liberalization on product quality may be one of the fundamental issues faced by policymakers. In the literature, several authors have addressed this question. Amiti
and Khandelwal (2013) examined the impact of competition on the product quality
of US rms producing for the local market. Considering the increase in product qua-lity as an innovation they conclude that the incentive to innovate is negatively related to the distance that separates the quality level of the rm's products from the world quality frontier. These results corroborate the theoretical predictions of Aghion and Howitt (2005) that the relationship between competition and innovation is nonmono-tonic. Thus, countries close to the world quality frontier tend to increase the quality of their products following tari reduction, while the opposite eect is observed for countries far from this frontier. Curzi et al. (2014) addressed the same question in the agri-food sector. They reached the same conclusions as Amiti and Khandelwal (2013) and highlighted the relationship between factor productivity and product quality. Unlike the two previous studies, which suggest a nonmonotonic relationship between competition and product quality, Tanaka (1995) implements a theoretical model that leads to dierent conclusions. The author considers a monopolistic competition market structure and seeks to examine the link between trade liberalization and product qua-lity. His results depend on the structure of the xed cost of rms. When the xed costs are nonzero and positively related to product quality, market liberalization characteri-zed by the entry of new rms leads to a reduction in product quality. However, with zero xed costs, any entry of new rms into the market leaves the quality unchanged.
The dierence in the results of the two studies is probably in the approaches. Amiti and Khandelwal (2013) measure competition by a decrease in import taris, while Ta-naka (1995) considers the entry of new rms to be an increase in competition. It is obvious that the two measures do not have the same impact on rms' costs and, indi-rectly, their behavior following trade liberalization. The Amiti and Khandelwal (2013) approach, which implies a reduction in trade costs, gives rms much more room for qua-lity upgrading. The reason of product quaqua-lity declining as new rms enter the market may be given by theMelitz (2003) heterogeneous rm model in which new entrants are less productive than those already present in the market. If product quality is positively related to productivity, as Fan et al.(2015) assume, it is theoretically obvious that any new entry of (less productive) rms pulls the average level of quality down. It should also be noted that the results of Amiti and Khandelwal (2013) were corroborated by
Curzi and Pacca (2015) with dierent data whereas the Tanaka (1995) study remains theoretical and has not been empirically tested to date.
The studies ofAmiti and Khandelwal(2013) andCurzi and Pacca(2015), while empiri-cally rich, do not theoretiempiri-cally model the link between trade liberalization and product quality. This was taken into account by Fan et al.(2015) but, unlike the previous stu-dies, they focused on tari reduction on imported inputs and their implications for export quality. Their theoretical conclusions indicate that the reduction of input ta-ris increase export quality with greater eect for dierentiated products. The authors con rmed their theoretical conclusions wit rm-level data in China from 2001 to 2006. However, this study does not take into account taris imposed by destination coun-tries on exported outputs. However, in trade negotiations, tari reduction is mostly reciprocals. These taris are also an important component of trade costs for exporting countries, and its inclusion in the will make it more realistic.
Bas and Strauss-Kahn (2015) used the same data as Fan et al. (2015) for the same purpose. These authors show that the reduction of input taris leads to an increase in export quality and prices if and only if these exports are destined for the developed countries, thus con rming the pioneering work of Viner(1950) which suggests that rich countries import higher quality products.Hayakawa et al.(2017) attempted to take this reality into account, but only empirically. The results obtained suggest that the reduc-tion of import taris of inputs improves product quality while that of output taris has no in uence on export quality. These results contrast those of Curzi and Pacca (2015) who indicate that trade costs in uence export prices and quality. It is important to note that the two studies dier in the nature of the data used. Hayakawa et al. (2017) used data from Indonesian rms while Curzi and Pacca (2015) used aggregated
indus-try data from 15 European Union countries. One of the limits of the Hayakawa et al.
(2017) study is that no theoretical investigation has been made about the relationship between product quality and export taris.
This article analyzes the implications of input and output tari reductions on export quality and prices taking these limits into account. It is innovative at two levels. First, it takes into account, in a theoretical model, input and output taris faced by rms, unlike the previous studies, which analyzed the impact of these taris separately or only considered them from a purely empirical angle. Second, it empirically tests the eect of a combination of ad valorem and speci c taris, unlike previous studies. The existence of speci c taris was taken into account by Curzi and Pacca (2015), but separately, which could lead to biased estimates. The interaction between speci c and ad valorem taris has not been examined by these authors. This is important for policymakers as it indicates the more e cient tari to reduce in order to improve export quality. Our empirical analysis focuses on the agricultural sector, given that it is one of the sectors facing the most di culties in trade negotiations. The most striking example is the deadlock observed at the time of the signing of the Global Economic and Commer-cial Agreement (CETA) between Canada and the European Union countries. One of the reasons for this blockage was the need to protect the agri-food sector in some EU countries in order to preserve the quality of some products1. Agriculture also remains
one of the most protected sectors despite the increase in trade liberalization. Analyzing the implications of trade liberalization on the quality of agri-food products thus turns out to be of great importance. The remainder of the article is organized as follows. Section 2 presents our quality measurement and some stylized facts. Sections 3 and 4 present the theoretical model and the empirical strategy respectively. The results and discussion are presented in Section 5, and Section 6 concludes.
1.4 Quality measurement and some stylized facts
The measurement of product quality is one of the major challenges in quality studies. A product may have characteristics that are important for the consumer, but unobservable by the researcher. As many measures of quality exist in the literature, we present our quality measurement and some stylized facts in this section.
1.4.1 Quality measurement
Several authors have proposed methods for estimating product quality from the consu-mer's point of view (Hallak, 2006; Hallak and Schott, 2011; Khandelwal, 2010; Amiti and Khandelwal,2013). The methods of Khandelwal(2010) andAmiti and Khandelwal
(2013) are the most used in the literature on the relationship between trade liberaliza-tion and product quality. We choose the method of Khandelwal et al. (2013) because of the availability of data and the inadequacies found in the other estimation methods. Indeed, the methods of Hallak (2006) and Hallak and Schott (2011) assume that the unit value of the products is an indicator of quality, whereas the dierences in this value between products of dierent origins may simply be a consequence of the dierence in production costs. The Khandelwal (2010)' method takes into account this de ciency, but its implementation requires data on production and domestic consumption. Amiti and Khandelwal (2013) propose a method for estimating product quality based on a CES-type utility function. The demand function from this utility function is given by equation (1.1).
x(ω) = YcPcσ−1q(ω) σ−1
p(ω)−σ (1.1)
where q(ω), p(ω) and x(ω) are the quality, the price, and quantity of the variety ω, respectively. The variables YC and Pc are respectively the income and the consumer
price index of the destination country and σ is the elasticity of substitution between varieties. In logarithmic form and taking into account the evolution over time, we obtain the following functional form :
ln(xijht) + σ ln(pijht) = αjt+ ijht (1.2)
where i, j, h, and t denote respectively the origin country, destination country, the product considered and time. αjt allows us to take into account the eects of the
destination country's price index and income and their evolution over time. The quality being unobservable, its logarithm can be obtained from the error term and thus gives the following :
ln(ˆqijht) =
ˆ ijht
σ − 1 (1.3)
where ˆijht is the esmated value of error term of equation 1.2. Quality can now be
estimated if the value of the elasticity of substitution σ is known. Broda et al. (2006) estimated that the median value of this elasticity is 3.8. With our data, we estimated equation (1.2). Speci c eects are used for the couple destination-year, on one the hand, and for the product on the other hand. We also imposed σ to be equal to 3 or 5. By using two values of elasticity of substitution, higher and lower than the median value
found by Broda et al. (2006), we are able to check the stability of our results. The estimate of the error term of equation (1.2) is then used to compute the quality index by dividing it by σ − 1.
The recent work of Piveteau and Smagghue (2019) propose a new method to estimate product quality using rm level data. The dierence between this method and that of
Amiti and Khandelwal (2013) is that in the former, the price is instrumented by the interaction between real exchange rate and the share of export. However, as argued by Piveteau and Smagghue (2019), the Amiti and Khandelwal (2013) method is more appropriate if we are using country-level data as it uses the elasticities of substitution estimated at country level by Broda et al.(2006).
1.4.2 Some stylized facts
The purpose of this section is to analyze some OECD export trends for the commodi-ties analyzed. Before analyzing these trends, it is important to describe the products we used in this article. Two main groups of products have been chosen in order to be able to make a comparison between dierentiated and homogeneous products. This dis-tinction was made on the basis of the Rauch(1999) classi cation, which distinguishes between dierentiated and homogeneous products on the basis of their Harmonized System codes. The Rauch(1999) classi cation is largely used in studies like in those of
Fan et al. (2015) andTian et al. (2016).
The two groups of products selected are meat2 (homogeneous) and cocoa products
(dierentiated : butter, oil, powder, and chocolate). Indeed, the only element of die-rentiation for meat products lies in the way the product is presented (the way of cutting and packaging). As a result, the criteria for dierentiation are few from the consumer point of view, who considers them to be homogeneous. On the other hand, the cocoa-based preparations, especially chocolates, present quite dierent dierentiation criteria from the packaging to the cocoa bean content contained in the nal product. This wide range of dierentiation criteria supports the idea that consumers dierentiate this ca-tegory of products. The description of all products used in this article is in table 1.1.
2. Considering meat as homogeneous product can be inappropriate because some dierences in the product characteristics could exist. But what is important here is to compare product with a weak dierentiation to others with high dierentiation. This is captured by the parameter η in our theoretical model. Then, we use of the term "homogeneous" in this paper aims to only make the dierence between the two groups of products.
Table 1.1 Product description
Outputs Inputs
HS codes Description HS codes Description Meat products
0201 Meat of bovine animals ; fresh
or chilled 0102 Bovine animals ; live
0202 Meat of bovine animals ; fro-zen
0203 Meat of swine ; fresh, chilled
or frozen 0103 Swine ; live
0204 Meat of sheep or goats ; fresh,
chilled or frozen 0104 Sheep and goats ; live 0205 Meat ; of horses, asses, mules
or hinnies, fresh, chilled or fro-zen
0101 Horses, asses, mules and hin-nies ; live
0207 Meat and edible oal of poul-try ; of the poulpoul-try of heading no. 0105, (i.e. fowls of the spe-cies Gallus domesticus), fresh, chilled or frozen
0105 Poultry ; live, fowls of the spe-cies Gallus domesticus, ducks, geese, turkeys and guinea fowls
0208 Meat and edible meat oal, n.e.c. in chapter 2 ; fresh, chil-led or frozen
0106 Animals ; live, n.e.c. in chapter 01
0210 Meat and edible meat oal ;salted, in brine, dried or smoked ; edible ours and meals of meat or meat oal
0103 Swine ; live
0105 Poultry ; live, fowls of the spe-cies Gallus domesticus, ducks, geese, turkeys and guinea fowls
Chocolate products 1804 Cocoa ; butter, fat and oil
1801 Cocoa beans ; whole orbroken, raw or roasted 1805 Cocoa ; powder, not
contai-ning added sugar or other sweetening matter
1806 Chocolate and other food pre-parations containing cocoa
We analyzed trade and quality trends in three points. First, we analyze the distribu-tion of quality of products exported to high-income countries and low-income countries according to the World Development Indicators classi cation in Figure 1.1. The main nding is that quality of exports to high-income countries is less concentrated than that of exports to low-income countries for both homogeneous and dierentiated products. Then, rms tend to oer nearly similar but quality products to consumers in low-income countries, while for high-low-income countries, quality may vary signi cantly from
one country to another. This supports Hallak (2006) view that rms dierentiate the quality of their exports by destination. This is corroborated by, gure 1.2, which shows the relationship between price and quality exported to high-income and low-income countries in scatter plots. Prices and quality are positively related for exports destined to high-income countries for dierentiated and homogeneous products. The nature of the relationship between price and quality of products exported to low-income countries is not clearly visible on the graph for homogeneous products but it seems to be positive for dierentiated products. This observation raises the issue of using price as a measure of quality, supporting the idea of Khandelwal (2010) that dierences in prices may be due to other factors than quality.
Figure 1.2 Price and quality by product type and destination income group
Second, gure 1.3 shows the evolution of output ad valorem taris by country income group from 1990 to 2015. The rst observation is that, as excepted for low-income coun-tries, taris show a downward trend for both dierentiated and homogeneous products. In addition, the ad valorem taris imposed by high-income countries remain lower than those of other groups of countries whatever the type of product. For all groups of coun-tries and products, ad valorem taris have been relatively stable in general since the beginning of the year 2003. This phenomenon is probably due to the entry of a large number of these countries into the World Trade Organization (WTO). Moreover, it is impossible to observe a dierence in average taris between homogeneous and dieren-tiated products.
Figure 1.3 Output ad valorem tari evolution by product type
Finally, a correlation analysis allows us to have a rst impression of the relation between quality and tari. Table 1.2 present the correlation coe cient between our measure of quality and taris. Overall, taris and quality are negatively correlated. Although the correlation coe cients are small, they are statistically very signi cant. Nevertheless, this analysis does not allow us to see the direction of causality of this negative relation-ship. The empirical analysis will help us to address this issue.
Table 1.2 Correlation coe cient between quality and taris
Quality (σ = 5) Quality (σ = 3) Output tari Input tari Quality (σ = 5) 1.000
Quality (σ = 3) 0.923∗∗∗ 1.000
Output tari -0.036∗∗∗ -0.037∗∗∗ 1.000
Input tari 0.004 -0.015∗∗∗ 0.004 1.000 ∗ ∗ ∗, ∗∗, ∗ : signi cant at 1%, 5% and 10% respectively
1.5 Theoretical background
the analysis.
1.5.1 Demand
The consumption model considers a representative consumer in each destination coun-try with a CES-type utility function that is similar to that used byKugler and Verhoo-gen (2011) and by Gaigné and Larue(2016) :
U = L X i v ln Z ωΩ q(ω)ησx(ω) σ−1 σ dω σ−1σ (1.4) where v is the industry's share of total expenditures, q(ω) and x(ω) measures the quality and quantity consumed of the variety ω, respectively. η and σ give the degree of product dierentiation and the elasticity of substitution between varieties, respectively. The set of varieties available in the industry are given by Ω. Solving the consumer problem gives the following demand function for variety ω in the industry :
x(ω) = vEPσ−1q(ω)ηp(ω)−σ (1.5) E, P , and p(ω) represent the total expenditures, the industry price index and the price of the variety ω, respectively. Each rm is a price taker of the industry price index as its behavior does not in uence this index.
1.5.2 Production
The production model assumes that each rm is represented by the following Cobb-Douglas production function :
Y = φ(ω)q(ω)−αL(ω)1−µ)M (ω)µ (1.6) where φ is rm productivity and α > 0 implies that for a given level of input, the increase in the quality of a variety requires a decrease in its quantity and vice versa. We also consider two types of inputs L and M, which are local and imported, respectively. Taking the input produced locally as the numeraire, the rm's marginal cost function is given by the following expression :
C(q, Pm, φ) = q
α
φ µ1