Abstract
Innovation activities in transition economies generally lag behind developed economies. This is also the case in the latest group of EU candidate countries whose innovation performance lags behind EU-27 average. In this paper we analyze the innovation propensity of firms in EU candidate countries (Croatia, FYR Macedonia, Montenegro and Turkey). The analysis relies on the Business Environment and Enterprise Performance Survey (BEEPS 2009) data. By employing probit model we have identified determinants of innovation propensity in analyzed countries. The results point to external factors such as the subsidies, customer pressure to innovate, obstacles from high tax burdens, political instability and inadequate education of workforce as significant positive predictors. Based on the results, few innovation policy recommendations are proposed.
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Notes
FYR Macedonia and Montenegro are not included in EIS.
More information on the survey, together with the questionnaire and the data can be found on the EBRD (2011) internet page http://www.ebrd.com/pages/research/economics/data/beeps.shtml.
The actual estimation sample is somewhat reduced, to exclude those enterprises that did not respond to the innovation-related question. It consists of 1,787 firms.
The precise definition of the transformation of the respondents' answers into variables is presented in the Appendix Table at the end of the paper.
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Appendix: Variable definition
Appendix: Variable definition
Variable | Description (dummy variables) |
|---|---|
Innovation | =1 if enterprise has introduced new products or services |
Montenegro | =1 if respondent is from Montenegro |
Macedonia | =1 if respondent is from Macedonia |
Turkey | =1 if respondent is from Turkey |
Very small | =1 if enterprise has less than 5 employed |
Small | =1 if enterprise has more than 5 and less than 19 employed |
Large | =1 if enterprise has more than 100 employed |
Part | =1 if enterprise is a part of a larger firm |
Foreign | =1 if share of foreign ownership is more than 50% |
Government | =1 if share of government ownership is more than 50% |
Competition foreign | =1 if it is fairly important (3) and very important (4) factor for developing new products or services |
Competition domestic | =1 if it is fairly important (3) and very important (4) factor for developing new products or services |
Customers | =1 if it is fairly important (3) and very important (4) factor for developing new products or services |
Subvention | =1 if enterprise received subsidies from national, regional or local governments or European Union sources |
Tax rates | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
Tax administration | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
Political instability | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
Corruption | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
Labour regulations | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
Inadequate education of workforce | =1 if respondent declared that it represents major obstacle (3) or very severe obstacle (4) |
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Božić, L., Botrić, V. Innovation Propensity in the EU Candidate Countries. Transit Stud Rev 18, 405–417 (2011). https://doi.org/10.1007/s11300-011-0205-3
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DOI: https://doi.org/10.1007/s11300-011-0205-3