What affects national innovative capacity? The role of economic growth and trade openness

Chien-Chiang Lee and Ya-Nan Zhao

Economic Analysis and Policy, 2025, vol. 86, issue C, 1099-1118

Abstract: National innovative capacity (NIC) plays a crucial role in promoting the economic development of countries. This study analyzes the influential factors and heterogeneity characteristics of NIC in 82 countries using data from 2000 to 2020. The analysis of influencing factors using a fixed-effects model revealed that the innovative infrastructure, the innovative environment, and the link between innovative infrastructure and the environment can significantly enhance the NIC. Heterogeneity analysis using the finite mixture model (FMM) finds that 82 countries can be grouped into three groups, and the NIC in different groups have different development paths. The factors influencing NIC have a positive effect in most countries, although a small number of countries’ innovation capacity is constrained by factors such as R&D expenditure. The dynamic analysis results show that NIC development in many countries has seen a positive path shift with economic development and increased openness. This study not only identifies the key factors affecting NIC, but also analyzes in depth how trade openness and economic growth affect NIC, as well as the heterogeneous characteristics of NIC among different groups of countries. The findings reveal the differences in the paths of NIC enhancement among countries at different levels of development, providing a theoretical basis for the formulation of targeted policies. In addition, this study provides a new perspective on the dynamic evolution of NIC, which can be further expanded to a wider sample of countries or combined with finer-grained industrial data in the future to optimize the policy design of NIC enhancement, so as to promote sustainable innovation and economic growth on a global scale.

Keywords: National innovative capacity (NIC); Heterogeneity; Finite mixture model (FMM); Economic growth; Trade openness (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:86:y:2025:i:c:p:1099-1118

DOI: 10.1016/j.eap.2025.04.022

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