The relationship between R&D, innovation and productivity in emerging economies: CDM model and alternatives

Anna Fedyunina () and Slavo Radosevic

Economic Systems, 2022, vol. 46, issue 3

Abstract: CDM (Crépon, Duguet and Mairesse, 1988) is a workhorse model in the economics of innovation, which explains productivity in a three-stage procedure driven initially by R&D and leads to patents and then to productivity improvements. Based on the logic of this model, an increasing number of papers applies it to emerging economies but modifies the original model without being explicit about the nature and implications of this modification. We argue in this paper that, in its original form, CDM does not capture stylized facts of the determinants of productivity in emerging economies and that we need alternative models. Accordingly, we are critical of papers that try to maintain the validity of the model but actually change it. For that purpose, we test the original CDM model and its two alternatives: investment and production capability–driven models. Our research is based on a large sample of firms in Central and Eastern Europe, former Soviet republics and Turkey, and we show that the alternative models are much closer to the stylized facts of innovation activities and technology upgrading in these and other emerging economies. Our conclusions have important policy implications, which we discuss.

Keywords: Innovation; CDM model; R&D; Productivity; Technology capability; Emerging economies; Eastern Europe (search for similar items in EconPapers)
JEL-codes: L63 O3 O57 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:46:y:2022:i:3:s0939362522000607

DOI: 10.1016/j.ecosys.2022.100998

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