Foreign trade and innovation: Evidence from Ukraine

Abstract

The creation and spread of new ideas are considered to be crucial for innovation, and consequently for growth of countries and regions. One of the mechanisms through which knowledge is transferred internationally is foreign trade. In the light of the above, the aim of this paper is to show the relationship between foreign trade and innovation of Ukraine as measured with the number of patent applications in 2004-2013. A correlation method has been used in the paper. Pearson correlation coefficients have been calculated, separately for the relationships between the values of imports and exports of goods and the number of inventions submitted for patent protection by Ukrainian entities. The analysis of Ukrainian data has not confirmed the commonly formulated hypothesis that foreign trade is a carrier for innovativeness. Foreign trade of Ukraine generally has no effect on the improvement of innovation of this country. It is only exports to countries being technological leaders (United States, Japan, Germany) that contribute to improvement in inventiveness of Ukrainian entities, but also in this case the role of foreign trade in increasing innovation in Ukraine can hardly be recognized as significant.