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A responsiveness-based (composite) indicator with an application to countries’ innovative performance

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Abstract

The aim of this paper is twofold: on one hand, from a methodological-statistical perspective, it develops a responsiveness-based index for a series of input factors on a specific target variable (assumed to capture the phenomenon the analyst wishes to look at), by means of an extended version of a random coefficient regression approach; on the other hand, it applies this methodology to the case of countries’ innovation performance, where the target variable is the country number of patents (as proxy of “innovativeness”), and where inputs are chosen according to the literature dealing with the measurement of country technological capabilities. The novelty of the approach presented in the paper regards the possibility of extracting from data a country-specific “reactivity effect” or “responsiveness” (that is, mathematically, a derivative) to each single input feeding into the regression. Thus, the paper provides a promising approach for ranking countries according to their responsiveness to specific inputs, an approach that can be complementary to the analysis on “level” performed, for instance, in the canonical composite indicators’ literature. As for results on countries’ innovation function, besides a (new) ranking of countries, this approach allows also for testing - in an original and straightforward way - the (possible) presence of increasing (decreasing) returns. Two years are considered and compared, 1995 and 2007, on 42 countries. Our tests conclude that in both years innovative increasing returns are at work, although in 2007 their strength drops considerably compared to 1995. According to a huge literature on the subject (both neoclassical and evolutionary), we conclude that a self-reinforcing mechanism in new knowledge production, absorption and diffusion is at the basis of these results. As for the structural change found between 1995 and 2007, we deem it to depend on the growing globalization of production and innovation processes and on the brilliant growth of some developing countries worldwide, with a remarkable role played – according to our results – by post-communist economies.

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Bibliographic Info

Paper provided by Institute for Economic Research on Firms and Growth - Moncalieri (TO) in its series CERIS Working Paper with number 201010.

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Length: 26 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:csc:cerisp:201010

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Keywords: Responsiveness; Country indicators; Random coefficient regression; Innovation function;

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References

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  1. A. Filippetti & A. Peyrache, 2010. "The Globalization of Technological Capabilities of Countries: A Dual Approach Using Composite Indicators & Data Envelopment Analysis," CEPA Working Papers Series WP102010, School of Economics, University of Queensland, Australia.
  2. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  3. Archibugi, Daniele & Coco, Alberto, 2005. "Measuring technological capabilities at the country level: A survey and a menu for choice," Research Policy, Elsevier, vol. 34(2), pages 175-194, March.
  4. Sala-i-martin, X. & Barro, R.J., 1995. "technological Diffusion, Convergence and Growth," Papers 735, Yale - Economic Growth Center.
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  6. Wooldridge, Jeffrey M., 1997. "On two stage least squares estimation of the average treatment effect in a random coefficient model," Economics Letters, Elsevier, vol. 56(2), pages 129-133, October.
  7. Angrist, J.D. & Imbens, G.W., 1992. "Average causal response with variable treatment intensity," Discussion Paper 1992-34, Tilburg University, Center for Economic Research.
  8. Malerba, Franco & Orsenigo, Luigi, 1996. "The Dynamics and Evolution of Industries," Industrial and Corporate Change, Oxford University Press, vol. 5(1), pages 51-87.
  9. Godin, Benoit, 2007. "Science, accounting and statistics: The input-output framework," Research Policy, Elsevier, vol. 36(9), pages 1388-1403, November.
  10. Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
  11. Wyplosz, Charles, 1991. "International trade with endogenous technological change : by L.A. Rivera-Batiz and P.M. Romer," European Economic Review, Elsevier, vol. 35(4), pages 1002-1004, May.
  12. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
  13. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  14. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "International Trade with Endogenous Technological Change," NBER Working Papers 3594, National Bureau of Economic Research, Inc.
  15. James, M.J., 2006. "An institutional critique of recent attempts to measure technological capabilities across countries," Open Access publications from Tilburg University urn:nbn:nl:ui:12-211378, Tilburg University.
  16. Rosenberg, Nathan, 1990. "Why do firms do basic research (with their own money)?," Research Policy, Elsevier, vol. 19(2), pages 165-174, April.
  17. repec:fth:harver:1473 is not listed on IDEAS
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