Technological Imitation and Innovation in New European Union Markets

Ainura Uzagalieva, Evžen Kočenda and António Menezes

No 3039, CESifo Working Paper Series from CESifo

Abstract: We analyze the role of imitation and innovation in promoting technological progress in new members of European Union: the Czech Republic, Hungary, Poland and Slovakia. The two modes of technological development—innovation and imitation—are distinguished from one another by identifying the dominant orientation of innovation efforts at the industry level. Specific industry features and the origin, structure and size of foreign direct investments in these countries are utilized for this purpose. The empirical relationship between intra-industrial bilateral trade flows, which proxy the level of technological progress, and innovation expenditures is analyzed using a gravity model. During the estimation stage, we use appropriate instruments to account for the potential endogeneity of innovation to trade. The results reveal the important role of foreign direct investment and multinationals in the technological progress of the region. Specifically, technological progress that is due to innovation is driven mainly by affiliates of foreign firms and multinationals.

Keywords: foreign direct investment; innovation; imitation; international trade; European Union (search for similar items in EconPapers)
JEL-codes: C51 F14 F21 O31 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3039

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