Product innovation by incumbent firms in developing economies : the roles of research and development expenditures, trade policy, and the investment climate
AbstractA model of firm innovation illustrates the effects of the threat of imitation and product varieties on a representative firm ' s decision to invest in research and development to produce new product varieties. The model motivates two empirical questions: (1) Is research and developm ent partially correlated with firms ' propensity to introduce new products or product innovation in developing countries? (2) Do trade policies and the national investment climate affect firms ' propensity for product innovation? The econometric evidence suggests that the answers are yes and yes, but the investment climate affects product innovation in a manner that is consistent with the presence of market failures and state capture. National trade-policy distortions appear to reduce the probability of product innovation, and the density of exporting firms at the national level also seems to positively affect the propensity to introduce new products by individual firms. The paper discusses some policy implications.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4319.
Date of creation: 01 Aug 2007
Date of revision:
E-Business; Innovation; Microfinance; Inequality; Economic Theory & Research;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-DEV-2007-08-27 (Development)
- NEP-INO-2007-08-27 (Innovation)
- NEP-MIC-2007-08-27 (Microeconomics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- World Bank, 2009. "Tunisia's Global Integration : A Second Generation of Reforms to Boost Growth and Employment," World Bank Publications, The World Bank, number 6298, August.
- Yasar, Mahmut & Paul, Catherine J. Morrison & Ward, Michael R., 2011. "Property Rights Institutions and Firm Performance: A Cross-Country Analysis," World Development, Elsevier, Elsevier, vol. 39(4), pages 648-661, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.