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The effect of developing countries' innovation policies on firms' decisions to invest in R&D

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  • Fernández-Sastre, Juan
  • Montalvo-Quizhpi, Fernando

Abstract

Using data on Ecuadorian firms for the period 2009–2011 and by employing inverse probability weighting, this paper compares the impact of two policy instruments that may induce firms in developing countries to invest in R&D activities. The first is public procurement which has recently been viewed as an important tool when encouraging innovation. The second is innovation support programs which are intended to increase firms' technological capabilities. Results indicate that public procurement does not induce firms to invest in R&D activities, even for the largest contracts. However, participating in innovation support programs does so. Furthermore, the combination of both policy instruments does not produce a significant effect on firms' decisions to invest in R&D activities.

Suggested Citation

  • Fernández-Sastre, Juan & Montalvo-Quizhpi, Fernando, 2019. "The effect of developing countries' innovation policies on firms' decisions to invest in R&D," Technological Forecasting and Social Change, Elsevier, vol. 143(C), pages 214-223.
    • Handle: RePEc:eee:tefoso:v:143:y:2019:i:c:p:214-223
    DOI: 10.1016/j.techfore.2019.02.006
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    2. Edeh, Jude Ndubuisi & Obodoechi, Divine Ndubuisi & Ramos-Hidalgo, Encarnación, 2020. "Effects of innovation strategies on export performance: New empirical evidence from developing market firms," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    3. Zhang, Dongyang & Guo, Rui & He, Xiaodan, 2022. "How does the exclusive license stimulate firm’s subsequent innovation? The role of innovation financial input," Research in International Business and Finance, Elsevier, vol. 60(C).
    4. Mardones, Cristian & Velásquez, Andrés, 2021. "Macroeconomic, intersectoral, and environmental effects of R&D subsidies in Chile: An input-output approach," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    5. Santos-Vijande, María Leticia & López-Sánchez, Jose Ángel & Pascual-Fernández, Primitiva & Rudd, John M., 2021. "Service innovation management in a modern economy: Insights on the interplay between firms’ innovative culture and project-level success factors," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    6. Kalyuzhnova, Yelena & Azhgaliyeva, Dina & Belitski, Maksim, 2022. "Public Policy Instruments for Procurement: An Empirical Analysis," Technological Forecasting and Social Change, Elsevier, vol. 176(C).

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