National Technological Capabilitiesand Innovation Performance

Krzysztof SzczygielskiCASE & Lazarski School

EACES workshop, 10. April 2010, Moscow

Definitions (in this paper)

National technological capabilities characteristics of the economic and social

system that determine a country’s ability to implement and develop new technologies

in particular: knowledge, skills, infrastructure cf. Fagerberg, Srholec, Verspagen (2010)

Innovation performance The intensity of introduction of new product and

processes by the firms (new to the firm)

Why a study of innovation performance?

Innovation activity is a key element of technological progress

The inferior performance of Eastern Europe

S hare of mnf firms that introduc ed produc t or proc es s innovations in 2006

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Why a study of national capabilities?

Contribution to the empirical literature Several studies have examined the relationship

between technological capabilities and innovation growth

But the hypothesized channel (i.e. innovations) remains unexplored

Interesting from the theoretical perspective

Policy relevance National technological capabilities relatively easily

addressed by policy measures

Research questions

Are there diminishing innovation returns to national technological capabilities?(hypothesis justified by the National Innovation

System approach)

Is inferior innovation performance of Eastern Europe explained by lower technological capabilities?

G E R D 2008

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Research methodology

Generally speaking: regression of the share of innovating manufacturing firms on various measures of national and sectoral technological capabilities.

Dataset Estimation strategy

Methodology: Data

Dependent variable: share of firms that introduced a process or a product innovation in 2006(Community Innovation Survey: 28 countries x 23 two-digit NACE industries)

Independent variables: innovation capabilities Knowledge

GERD as % of GDP Applications to the EPO per 1000 inhabitants Firm expenditure on R&D over sales (industry-level data) Number of citations (minus self-citation) per an average paper (data from Scopus)

Skills Number of engineers and scientists per 1000 employed Pseudo-skill-intensity (industry-level data)

Infrastructure Broadband penetration rate Price of a standard telecommunication service

Also necessary: average life expectancy in the country (data from the CIA handbook)

Methodology: estimation strategy

estimated by a Tobit regression

Three models:

Results (*)

Results (**)

Results (** for country subsets)

Results (***)

Conclusions

National technological capabilities (NTC) are a significant factor of industry-level innovation performance

Evidence on diminishing innovation returns is mixed and depends on the subset of countries and on the measure of technological capability

Differences in NTC cannot explain the entire East-West innovation gap

Next stage

More periods (previous CISs) Better handle of the collinearity and

endogeneity problems Extension to service industries?