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Innovation Policies and Technological Progress: Theoretical Approach and a Cross-Country Analysis
Abstract
This chapter examines how innovation policy and technological progress foster industrial transformation and economic development especially under the streams of neoclassical and evolutionary schools. Furthermore, a cross-country analysis of the relationship between innovation inputs and outputs, using data from the WIPO Global Innovation Index, is employed to investigate the relationship between institutional quality and innovation outcomes. This analysis is conducted for a panel of 129 countries using Ordinary Least Squares (OLS), Fixed Effects (FE), Random Effects (RE) and quantile regression methods. The empirical results show that low innovative capacity countries benefit more from infrastructure and human capital and R&D investment. In countries with moderate and advanced innovation capacity, the impact of business sophistication and market sophistication is increasing, and the deepening of R&D is becoming more important. The results also suggest that the impact of institutional quality is unclear and requires further study.
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