Innovation across Europe: How important are institutional differences?

Abstract

The literature on institutions and economic growth has showed that different institutions or policy designs affects productivity growth and international R&D spillovers. By changing the level of competition and/or affecting resources allocation, institutions can have a significant impact on firms' incentives to innovation. In this paper we test whether the existing institutional variation among European countries explains differences in innovation intensity. Our findings show that stronger regulation in the product market and greater protection of property rights favour innovation activity across Europe, whereas rigidity in the labor market affects negatively firms' incentives to innovate. These results highlight the importance of institutions in shaping innovation, thereby providing a contribution to the design of economic policy.

Kurumsal Yaklaşım Perspektifinden İnovasyon ve Yenilikçi Kamu Alımları

“…Öncelikle katı olarak nitelendirilebilecek işe alma ve işten çıkarma düzenlemeleri, sendikaların pazarlık gücünü artırması nedeniyle firmaların, inovasyon gerçekleştirildikten sonra ücret ayarlamalarını veya personel sayısını azaltma veya personelin yeniden tahsisini gerektiren yeni teknoloji ayarlamalarını yapmalarını daha zor hale getirmekte ve hatta firmaları, yeni teknoloji deneyimlerinden vazgeçirmektedir. Öte yandan katı işten çıkarma düzenlemelerinin işverenler için eğitime yatırım yapmalarını teşvik edici bir etkiye sahip olduğu ve böylelikle eğitime yapılan yatırımların çalışanların verimliliğini ve motivasyonunu artıracağı zıt bir etki olarak ileri sürülmektedir (Barbosa & Faria, 2011: 1159-1160. Bununla birlikte finansal regülasyonlar ise yeni firmaların oluşturulması, kurumsal yönetişim yapıları ve iflas kanunları için yasal gereksinimleri tanımlamaktadır.…”

Do Good Institutions Enhance the Effect of Technological Spillovers on Productivity? Comparative Evidence from Developed and Transition Economies

“…Moreover, they also stimulate innovation and investment in technologies by domestic firms, as stronger IPR will make more likely that these investments will pay off in terms of competitive advantage in the markets (Gans et al, 2008). Finally, pro-business market reforms (or the easiness of doing business aspects of institutions) impact positively the relationship between technological spillovers and productivity of countries by strengthening their national systems of innovation and encouraging the absorption and diffusion of new technical knowledge (Barbossa and Faria, 2011). These institutional reforms targeting business formation and operation are different from targeted innovation policy measures, and contribute indirectly to technicaldriven productivity enhancements via a stronger national system of innovation as a result of more foreign investors and venture capitalists, technological partnerships with MNEs, entrepreneurial incentives for universities and individuals (Allard et al, 2012).…”

Inclusive Institutions, Innovation and Economic Growth: Estimates for European Countries

“…The innovation systems literature focuses on the role of institutions in determining technological change, and stresses the importance of institutions such as universities and research institutes being linked to the production or diffusion of innovations (Barbosa and Faria, 2011;Lundvall, 1992). Furthermore, empirical analysis shows that institutional differences affect the extent of R&D spillovers; for example, countries where the ease of doing business, the quality of the tertiary education system and the level of patent protection are relatively high benefit more from R&D efforts and international R&D spillovers (Coe, Helpman and Hoffmaister, 2009;Tebaldi and Elmslie, 2013).…”

“…More broadly, recent studies argue that differences in per capita income can be explained by features of societal organisation that may prevent a country from adopting the best technologies (Acemoglu et al, 2005;Barbosa and Faria, 2011;Tabellini, 2008). For example, institutional failure may emerge when technological advancement represents a threat to the ruling groups and such groups consequently decide to block innovations to preserve their political power (Acemoglu and Robinson, 2000;Acemoglu, 2006).…”

“…The focus on the EU is motivated by the current discussion on policies to enhance economic growth after the failure of the Lisbon Strategy, for which the underlying belief is that more competition and less regulation bolster innovation and thus growth (Barbosa and Faria, 2011). More recently, improving social and institutional quality has been included as one of the principle objectives of the EU under the general framework of sustainable development and in the regional policy framework (Biagi and Lambir, 2007;Farole, Rodríguez -Pose and Storper, 2011).…”