Globalization and Innovation in Emerging Markets
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 th...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090105142547 http://hdl.handle.net/10986/4006 |
| Summary: | 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. |
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