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Technological Innovation in New European Union Markets

  • Ainura Uzagalieva


    (Centre of Applied Economics Studies of the Atlantic at the Department of Economics and Management, the University of the Azores, Portugal)

  • Evžen Kočenda
  • Antonio Menezes

We analyze the role of innovation in the technological development of four new EU members: the Czech Republic, Hungary, Poland and Slovakia. For that purpose, we use a novel approach by modeling the empirical relationship between intra-industrial bilateral trade flows, which proxy the level of technological progress, and innovation expenditures within the context of a gravity model with a set of appropriate instrumental variables to account for the potential endogeneity of innovation to trade. We show that innovation efforts in high-tech industries exhibit a strong effect on the technological progress of the region and they are closely linked to foreign direct investment and multinationals. As foreign-owned subsidiaries become a part of the innovation systems and industrial structure of the host country they promote overall technological growth in the region.

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Paper provided by Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) in its series Working Papers with number 312.

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Length: 32
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:ost:wpaper:312
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