Abstract: Using patent applications as a measure index of enterprise innovation, and using the weighted economic growth rate at the enterprise′s export destination as a tool variable for exports, this paper examines trade induced learning theory by testing the effect of export expansion on firm innovation and mechanism with merged data of Chinese Industry Survey, China Customs Data and Patent Data from 2000 to 2006. The contribution rates of export expansion to the growth of patent applications number, patent and utility new patent applications are 13.21%,15.61% and 13.18% respectively, while the impact on design patent applications is not significant; only firms engaged in ordinary-trading, or exporting to developed countries, can they have an invention increase in high quality patent, patent and patent applications number via export expansion. Therefore, China should encourage enterprises to trade with developed countries in Europe and America, and encourage enterprises to carry out general trade at the same time of developing processing trade in the context of China′s slowdown in export growth and the transformation of development model.

Key words: patent application, trade-induced learning, instrument variable, enterprise innovation