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Globalization and Innovation in Emerging Markets

Author Info

Listed author(s):
  • Gorodnichenko, Yuriy

    (University of Michigan)

  • Svejnar, Jan

    ()

    (University of Michigan)

  • Terrell, Katherine

    (University of Michigan)

Registered author(s):

    Abstract

    Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, the authors test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms's efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. They find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. The authors show that the supply chain of multinational enterprises and international trade are important channels for domestic firms' innovation. They detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.

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    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/01/05/000158349_20090105142547/Rendered/PDF/WPS4808.pdf
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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4808.

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    Length: 51 pages
    Date of creation: 01 Jan 2009
    Handle: RePEc:wbk:wbrwps:4808
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    Keywords: competition; innovation; emerging markets; spillovers;

    Find related papers by JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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    1. Carlin Wendy & Schaffer Mark & Seabright Paul, 2004. "A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-45, September.
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    Cited by:

    1. Golikova Victoria & Kuznetsov Boris, 2016. "The Role of Innovation and Globalization Strategies in Post-Crisis Recovery," HSE Working papers WP BRP 123/EC/2016, National Research University Higher School of Economics.
    2. Alena Zemplinerová, 2010. "Inovační aktivita firem a konkurence
      [Innovation Activity of Firms and Competition]      ," Politická ekonomie, University of Economics, Prague, vol. 2010(6), pages 747-760.

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