Innovation and Productivity in the service sector of emerging and developing countries

Paulo Regis and Benoît Desmarchelier ()
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Benoît Desmarchelier: Lille 1 University

No 2018-01, RIEI Working Papers from Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration

Abstract: This paper conducts a large cross-country study of innovation decisions and its effect on the productivity of the firms in the service sectors in developing countries. A structural model relating innovation and productivity is fitted with data from 97 emerging and developing countries. We find that R&D generates gains in labor productivity as well as in terms of an aggregate measure of capital and total factor productivity. However, the introduction of new products does not seem to have relevant impact on productivity measures. From a policy perspective, we find that tax burden and difficulties to access credit are significant obstacles to innovation in services. Considering the positive relationship between service innovation and productivity, these obstacles should be on top of policy agenda in the countries under study. Finally, competition from the international market and from the informal sector are both fostering innovation in services.

Keywords: innovation; productivity; services sector; developing countries (search for similar items in EconPapers)
JEL-codes: C34 L80 O14 O31 O33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2018-01-01
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ent, nep-ino and nep-tid
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