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A Multilevel Analysis of Innovation in Developing Countries

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  • Martin Srholec

Abstract

Innovation is a multilevel phenomenon. Not only attributes of firms but also the framework conditions within which firms operate matter. Although this has been recognized in the literature for a long time, a quantitative test that explicitly considers this hypothesis has been lacking. Using a large sample of firms from many developing countries, we estimate a multilevel model of innovation which connects micro and macro levels of analysis in an integrated framework. National economic, technological and institutional framework conditions are shown to directly predict the likelihood of firms to innovate. More specifically, general education, taxation of income and democratic political institutions turn out to be highly relevant, while macroeconomic stability is somewhat less relevant. But what tends to be perceived as “good” governance and the extent of public research infrastructure do not seem to make much difference. The latter result is interpreted as indicating that what matters is not how much money governments spend on the research infrastructure but rather how effectively these resources are used to leverage innovation. Nevertheless, the results also draw attention to the limits of the existing models, methods and data.

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp432.

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Date of creation: Jan 2011
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Handle: RePEc:cer:papers:wp432

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Keywords: innovation; technological capability; multilevel modeling; institutions; developing countries;

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Citations

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Cited by:
  1. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
  2. Quatraro, Francesco & Vivarelli, Marco, 2013. "Drivers of Entrepreneurship and Post-Entry Performance of Newborn Firms in Developing Countries," IZA Discussion Papers 7436, Institute for the Study of Labor (IZA).
  3. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  4. Rahmouni, Mohieddine & Ayadi, Mohamed & YIldIzoglu, Murat, 2010. "Characteristics of innovating firms in Tunisia: The essential role of external knowledge sources," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 181-196, August.
  5. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
  6. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.

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