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What Determines Firms’ Innovation in Eastern Europe and Central Asia

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  • Afandi, Elvin
  • Kermani, Majid

Abstract

By employing a rich sample of firm-level data in seven Eastern Europe and Central Asian countries from Europe and Central Asia, our paper investigates core as well as some specific determinants of firm innovation. We find that the likelihood of engaging in innovation for a firm increases with its core socio-economic characteristics such as size, age, capacity utilization, domestic competition and foreign ownership. In addition to the estimates of these socio-economic covariates, the ultimate purpose of our study is to obtain more in-depth knowledge about the policy implacable factors for firm innovation that the countries could focus on. These policy-related factors are: (i) access to finance, (ii) human capital, and (iii) foreign trade. In this respect, our study finds that firm’s innovation increases with better financial inclusion, greater human capital and engagement in foreign trade. We argue that these analysis and results, coupled with inclusive and targeted policies, can be used to enrich the process of private sector innovation in the region’s countries.

Suggested Citation

  • Afandi, Elvin & Kermani, Majid, 2013. "What Determines Firms’ Innovation in Eastern Europe and Central Asia," MPRA Paper 53255, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53255
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    References listed on IDEAS

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    4. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
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    Cited by:

    1. S.I. Kubiv & N.S. Bobro & G.S. Lopushnyak & Y.I. Lenher & A. Kozhyna, 2020. "Innovative Potential in European Countries: Analytical and Legal Aspects," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 250-264.

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    More about this item

    Keywords

    Firm innovation; access to finance; human capital; foreign trade;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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