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Absorptive Capacity and Innovative Capability: An Approach to Estimation

Polterovich, Victor and Tonis, Alexander (2014): Absorptive Capacity and Innovative Capability: An Approach to Estimation.

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Abstract

The concepts of absorptive capacity and innovative capability have been introduced to describe abilities of a country to imitate and, accordingly, to create more advanced technologies. In this paper we suggest new indicators of these two abilities. To calculate them, we develop an endogenous growth model and an estimation procedure that combines both calibration and econometric approaches. The choice of parameters is based on WDI, ICRG and Barro–Lee statistical data for the period of 1981-2005. As a result, the model generates trajectories of 63 countries and, for most of them, gives qualitatively correct pictures of their evolution dependently on their initial states as well as on their absorptive capacity and innovative capability indicators. In particular, club convergence is demonstrated. The calculations affirm our hypotheses about shapes of absorptive capacity and innovative capability dependence on the relative productivity level, human capital, institutional quality and some other factors.

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