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Globalization and Innovation in Emerging Markets

Yuriy Gorodnichenko, Jan Svejnar and Katherine Terrell

No 583, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, we test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms' efforts to raise their capability (innovate) by upgrading their technology or the quality of their product/service, taking into account firm heterogeneity. We find competition has a negative effect on innovation, especially for firms further from the frontier, and that the supply chain of multinational enterprises and international trade are important channels for domestic firm innovation. We do not find support for the inverted U effect of competition on innovation. There is weak evidence that firms in a more pro-business environment invest more in innovation and are more likely to display the inverted U relationship between competition and innovation.

Keywords: emerging markets; globalization; innovation (search for similar items in EconPapers)
Pages: 43 pages
Date: 2008-04
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ino, nep-mic, nep-tid and nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (28)

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http://www.fordschool.umich.edu/rsie/workingpapers/Papers576-600/r583.pdf

Related works:
Journal Article: Globalization and Innovation in Emerging Markets (2010) Downloads
Working Paper: Globalization and innovation in emerging markets (2009) Downloads
Working Paper: Globalization and Innovation in Emerging Markets (2008) Downloads
Working Paper: Globalization and innovation in emerging markets (2008) Downloads
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