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Technological Innovation And Productivity In Late-Transition Estonia: Econometric Evidence From Innovation Surveys

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  • Jaan Masso
  • Priit Vahter

Abstract

There is growing interest in modelling the relationship between innovation and productivity in developing and transition econo¬mies due to their attempts to establish knowledge-based economies and to increase business R&D. Our paper investigates whether there is a signi¬ficant relationship between technological innovation and pro¬ductivity in the manufacturing sector of Estonia. We use firm-level data for the analysis from two waves of Community Innovation Surveys (CIS3 and CIS4) from 1998–2000 and 2002–2004, which is then combined with financial data about firms from the Estonian Business Register in order to study the effect of innovation at higher leads. We apply a structural model that in¬volves a system of equations on innovation expenditure, inno¬vation outcome and productivity. Our results show that during 1998–2000 only product innovation increased productivity, while in 2002–2004 only process innovation had a positive effect on productivity. This can probably be explained by the different macroeconomic conditions in the two periods.

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Bibliographic Info

Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 61.

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Length: 51 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:mtk:febawb:61

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Keywords: productivity; innovation; Estonia;

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References

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  1. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July.
  2. Raul Eamets & Urmas Varblane & Kaja Sostra, 2003. "External Macroeconomic Shocks and the Estonian economy: How did the Russian Financial Crisis affect Estonian Unemployment and Foreign Trade?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 3(2), pages 5-24, July.
  3. Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans do I.T. better: US multinationals and the productivity miracle," LSE Research Online Documents on Economics 4555, London School of Economics and Political Science, LSE Library.
  4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Department of Economics, Working Paper Series qt1sz6g8bv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  5. Jose Miguel Benavente, 2006. "The role of research and innovation in promoting productivity in chile," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 301-315.
  6. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  7. Peters, Bettina & Lööf, Hans & Janz, Norbert, 2003. "Firm Level Innovation and Productivity: Is there a Common Story Across Countries?," ZEW Discussion Papers 03-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Jakob Klette & Samuel Kortum, 2002. "Innovating firms and aggregate innovation," Staff Report 300, Federal Reserve Bank of Minneapolis.
  9. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation, and Productivity: An Econometric Analysis at the Firm Level," NBER Working Papers 6696, National Bureau of Economic Research, Inc.
  10. Mario Pianta & Andrea Vaona, 2007. "Innovation and Productivity in European Industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(7), pages 485-499.
  11. Johannes Stephan, 2004. "The Productivity Gap between East and West Europe: What Role for Sectoral Structures during Integration?," Development and Comp Systems 0403004, EconWPA.
  12. Priit Vahter, 2006. "Productivity in Estonian enterprises: the role of innovation and competition," Bank of Estonia Working Papers 2006-07, Bank of Estonia, revised 11 Dec 2006.
  13. Kadri Ukrainski & Urmas Varblane, 2005. "Sources Of Innovation In The Estonian Forest And Wood Cluster," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 36, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  14. Chudnovsky, Daniel & Lopez, Andres & Pupato, German, 2006. "Innovation and productivity in developing countries: A study of Argentine manufacturing firms' behavior (1992-2001)," Research Policy, Elsevier, vol. 35(2), pages 266-288, March.
  15. repec:fth:inseep:9833 is not listed on IDEAS
  16. Lööf, Hans & Heshmati, Almas & Asplund, Rita & Nåås, Svein-Olav, 2001. "Innovation and Performance in Manufacturing Industries: A Comparison of the Nordic Countries," Working Paper Series in Economics and Finance 0457, Stockholm School of Economics.
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Cited by:
  1. Priit Vahter, 2011. "Learning By Exporting: Evidence Based on Data of Knowledge Flows from Innovation Surveys in Estonia," William Davidson Institute Working Papers Series wp1011, William Davidson Institute at the University of Michigan.
  2. Richard Harris & John Moffat, 2011. "R&D, Innovation and Exporting," SERC Discussion Papers 0073, Spatial Economics Research Centre, LSE.
  3. Crespi, Gustavo & Zuniga, Pluvia, 2012. "Innovation and Productivity: Evidence from Six Latin American Countries," World Development, Elsevier, vol. 40(2), pages 273-290.
  4. Jacques Mairesse & Pierre Mohnen, 2010. "Using Innovations Surveys for Econometric Analysis," NBER Working Papers 15857, National Bureau of Economic Research, Inc.
  5. Kadri Männasoo & Jaanika Meriküll, 2011. "How do demand fluctations and credit constraints affect R&D? Evidence from Central, Southern and Eastern Europe," Bank of Estonia Working Papers wp2011-09, Bank of Estonia, revised 19 Jul 2011.
  6. Masso, Jaan & Roolaht, Tõnu & Varblane, Urmas, 2010. "Foreign direct investment and innovation in Central and eastern Europe : evidence from Estonia," Bank of Estonia Working Papers wp2010-05, Bank of Estonia, revised 14 Apr 2010.
  7. Jaan Masso & Priit Vahter, 2012. "The link between innovation and productivity in Estonia's services sector," The Service Industries Journal, Taylor & Francis Journals, vol. 32(16), pages 2527-2541, December.
  8. Jacinta Moreira & Maria Jose Silva & Jorge Simões & Gastão Sousa, 2012. "Drivers of Marketing Innovation in Portuguese Firms," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(31), pages 195-206, February.
  9. Pierre Mohnen & Bronwyn H. Hall, 2013. "Innovation and Productivity: An Update," Eurasian Business Review, Eurasia Business and Economics Society, vol. 3(1), pages 47-65, Spring.
  10. María Angélica Arbeláez & Mónica Parra Torrado, 2009. "Innovation, R&D Investment and Productivity in Colombia," INFORMES DE INVESTIGACIÓN 009062, FEDESARROLLO.
  11. Esther Goya & Esther Vayá & Jordi Suriñach, 2012. "“Do intra- and inter-industry spillovers matter? CDM model estimates for Spain”," IREA Working Papers 201214, University of Barcelona, Research Institute of Applied Economics, revised Sep 2012.
  12. Bronwyn H. Hall, 2011. "Innovation and Productivity," NBER Working Papers 17178, National Bureau of Economic Research, Inc.
  13. Grigorii V. Teplykh, 2014. "Innovations and productivity: the shift during the 2008 crisis," HSE Working papers WP BRP 23/STI/2014, National Research University Higher School of Economics.

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