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

Author

Listed:
  • Regis, Paulo José

    (Division of Economics, Xi'an Jiaotong-Liverpool University)

  • Desmarchelier, Benoît

    (Lille 1 University)

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.

Suggested Citation

  • Regis, Paulo José & Desmarchelier, Benoît, 2018. "Innovation and Productivity in the service sector of emerging and developing countries," RIEI Working Papers 2018-01, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
    • Handle: RePEc:xjt:rieiwp:2018-01
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    References listed on IDEAS

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    More about this item

    Keywords

    innovation; productivity; services sector; developing countries;
    All these keywords.

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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