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Globalization and innovation in emerging markets

Yuriy Gorodnichenko, Jan Svejnar and Katherine Terrell

No 4808, Policy Research Working Paper Series from The World Bank

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, the authors test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms'efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. They find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. The authors show that the supply chain of multinational enterprises and international trade are important channels for domestic firms'innovation. They detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.

Keywords: E-Business; Education for Development (superceded); Microfinance; Labor Policies; Emerging Markets (search for similar items in EconPapers)
Date: 2009-01-01
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-mic, nep-tid and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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