Determinants of Innovative Activities: Evidence from Europe and Central Asia Region

Lau, Chi Keung Marco and Yang, Fu Steve and Zhang, Zhe and Leung, Vincent K.K. (2013): Determinants of Innovative Activities: Evidence from Europe and Central Asia Region.

Abstract

Recent studies in the innovation literature reveal that Foreign Direct Investment (FDI) promotes the innovation activities in the recipent country through spillover effects. In this paper we extend the existing literature by incooprating the corruption index in the estimation procedure. Using a cross-country analysis from the Europe and Central Asia (ECA) region , covering 57 countries over the period of 1995-2010, we find no evidence of FDI spillover effect on innovative activity. However, corporate corruption and expenditure on education sector are positively related to the number of patents applications. Our study shed light on the national innovation activities and anti-corruption programs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign direct investment; Corruption; Innovation; Technology transfer
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy

References

Acs, Z. J., Anselin, L., & Varga, A. (2002). Patents and innovation counts as measures of regional production of new knowledge. Research Policy, 31(7), 1069-1085.

Anokhin, S., & Schulze, W. S. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Venturing, 24(5), 465-476.

Baskaran, A. a. M., Mammo. . (2008). The impact of the national innovation systems on the flow and benefits of foreign direct investment to national economics. Working Paper. DIIPER & Department of History, International and Social Studies.

Bilgin, M. H., Lau, C. K. M., Demir, E. (2012). Technology Transfer, Finance Channels, And Sme Performance: New Evidence From Developing Countries. The Singapore Economic Review, 57(03), 12500-12520.

Blomström, M., & Sjöholm, F. (1999). Technology transfer and spillovers: Does local participation with multinationals matter? European Economic Review, 43(4–6), 915-923.

Chen, Y., Liu, M., & Su, J. (2013). Greasing the wheels of bank lending: Evidence from private firms in China. Journal of Banking & Finance(0).

Cheung, K.-y., & Lin, P. (2004). Spillover effects of FDI on innovation in China: Evidence from the provincial data. China Economic Review, 15(1), 25-44.

Cuervo-Cazurra, A. (2006). Who cares about corruption? Journal of International Business Studies, 37(6), 807-822.

de Dominicis, L., Florax, R. J. G. M., & de Groot, H. L. F. (2012). Regional clusters of innovative activity in Europe: are social capital and geographical proximity key determinants? Applied Economics, 45(17), 2325-2335.

Dutt, P., & Traca, D. (2010). Corruption and Bilateral Trade Flows: Extortion or Evasion? Review of Economics and Statistics, 92(4), 843-860.

Edquist, C. (1997). Systems of Innovation: Technologies, Institutions and Organizations. Pinter, London.

Fung, K.W. T., C.K. M. Lau., (2013). Financial Development, Economic Growth and R&D Cyclical Movements. Journal of Applied Economics and Business Research, 3(3), 133-145.

Furman, J. L., & Hayes, R. (2004). Catching up or standing still?: National innovative productivity among ‘follower’ countries, 1978–1999. Research Policy, 33(9), 1329-1354.

Furman, J. L., Porter, M. E., & Stern, S. (2002). The determinants of national innovative capacity. Research Policy, 31(6), 899-933.

Grande, E., & Peschke, A. (1999). Transnational cooperation and policy networks in European science policy-making. Research Policy, 28(1), 43-61.

Grossman, G., & Helpman, E. (1991). Innovation and Growth in the Global Economy (Vol. null).

Hellman, J., Kaufmann, D.,(2002). The inequality of influence. In: Kornai, J., Rose-Ackerman, S. (Eds.), Trust in Transition. Palgrave-Macmillan, New York.

Holcomb, T. R., Holmes Jr, R. M., & Connelly, B. L. (2009). Making the most of what you have: managerial ability as a source of resource value creation. Strategic Management Journal, 30(5), 457-485.

Hu, M.-C., & Mathews, J. A. (2005). National innovative capacity in East Asia. Research Policy, 34(9), 1322-1349.

Jaffe, A. B. (1989). Characterizing the “technological position” of firms, with application to quantifying technological opportunity and research spillovers. Research Policy, 18(2), 87-97.

Lund Vinding, A. (2006). Absorptive capacity and innovative performance: A human capital approach. Economics of Innovation and New Technology, 15(4-5), 507-517.

Lundvall, B.-Å., Johnson, B., Andersen, E. S., & Dalum, B. (2002). National systems of production, innovation and competence building. Research Policy, 31(2), 213-231.

Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712.

Meschi, P.-X. (2009). Government corruption and foreign stakes in international joint ventures in emerging economies. Asia Pacific Journal of Management, 26(2), 241-261.

OECD. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data (3rd Ed.) OECD Publishing.

Smarzynska, B. K., & Wei, S.-J. (2000). Corruption and Composition of Foreign Direct Investment: Firm-Level Evidence. National Bureau of Economic Research Working Paper Series, No. 7969.

Varsakelis, N. C. (2001). The impact of patent protection, economy openness and national culture on R&D investment: a cross-country empirical investigation. Research Policy, 30(7), 1059-1068.

Varsakelis, N. C. (2006). Education, political institutions and innovative activity: A cross-country empirical investigation. Research Policy, 35(7), 1083-1090.

Wang, Y., & You, J. (2012). Corruption and firm growth: Evidence from China. China Economic Review, 23(2), 415-433.

World Bank. (2012). Fighting corruption in public services : chronicling Georgia's reforms. Directions in development: public sector governance. Washington D.C. - The Worldbank. http://documents.worldbank.org/curated/en/2012/01/15647088/fighting-corruption-public-services-chronicling-georgias-reforms