The innovation gap between “Old” and “New” European Countries

Antonella Biscione () and Gianluigi De Pascale ()
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Antonella Biscione: Department of Economics, University of Molise, Campobasso-Italy, CESPIC, Catholic University ‘Our Lady of Good Counsel’, Tirana-Albania Author-Name: Maria Cipollina
Gianluigi De Pascale: Department of Economics, University of Foggia, Foggia-Italy

No 1026, Working Papers from European Centre of Peace Science, Integration and Cooperation (CESPIC), Catholic University 'Our Lady of Good Counsel'

Abstract: This paper investigates the drivers of disparities in firm innovativeness between the “New Europe” (countries joining the EU after 2004) and the “Old Europe” (EU members before 2004). Using firm-level data from the World Bank Enterprise Surveys (2018–2020 waves), we apply a Blinder-Oaxaca decomposition approach to identify the key factors behind these differences. Our findings show that firms in “Old Europe” benefit from better human capital, managerial experience, financial access, and stronger export orientation, all of which enhance firms’ innovation performance. On the contrary, firms in “New Europe” face constraints that reduce their innovation potential. In addition, institutional differences, such as lower political stability, weaker infrastructure, and higher perceived corruption, further contribute to widening the innovation gap between the two regions.

Keywords: Technological innovation; Innovation gap; European Union; Blinder- Oaxaca (search for similar items in EconPapers)
Pages: 28pages
Date: 2026-02
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