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Is Innovation in Pakistan Driven by Specialisation or Diversity?

Adeel Ali, Faizan Iftikhar and Muhammad Sabihuddin Butt
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Adeel Ali: Project Economist/Research Assistant, Applied Economics Research Centre, University of Karachi, Karachi
Faizan Iftikhar: Assistant Professor, Applied Economics Research Centre, University of Karachi, Karachi
Muhammad Sabihuddin Butt: Associate Professor, Applied Economics Research Centre, University of Karachi, Karachi

The Pakistan Development Review, 2016, vol. 55, issue 4, 705-714

Abstract: Innovation is among the main drivers of industrial development leading to economic growth. However, the question triggers that what drives innovation? Is innovation driven by specialisation or diversification? The literature has supported both, the specialisation and diversification as driver of innovation. Therefore, the purpose of this paper is to explore the determinants of innovation in Pakistan with a special emphasis on specialisation and diversity. The analysis is based on the cross sectional data set of 784 firms across 13 different cities of Pakistan, i.e. Investment Climate Survey (ICS) 2007, compiled by the World Bank Enterprise Group. Our findings have showed the positive relation between innovation and diversity i.e. diversity is conducive to innovation. On the other hand, specialisation has a negative effect i.e. it hinders innovation in cities of Pakistan.

Keywords: Innovation; Specialisation; Diversity; Logistic Regression (search for similar items in EconPapers)
JEL-codes: C21 C25 O31 O32 (search for similar items in EconPapers)
Date: 2016
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