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 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.

Bibliographic Details

Main Authors:	Gorodnichenko, Yuriy, Svejnar, Jan, Terrell, Katherine
Language:	English
Published:	2009-01-01
Subjects:	ADVANCED ECONOMIES, ALTERNATIVE STRATEGY, BARRIERS TO ENTRY, BEST BUSINESS PRACTICE, BUSINESS ASSOCIATIONS, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, BUSINESS SERVICES, CAPABILITIES, CAPABILITY, CAPACITY UTILIZATION, COMMERCE, COMPETITIVENESS, COMPETITORS, COMPLEXITY, CONCEPTUAL FRAMEWORK, CORPORATE OWNERSHIP, CORPORATE PERFORMANCE, COVARIANCE MATRIX, CUSTOMS, DEMOCRACY, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DIRECT CONNECTIONS, DISCUSSION, DOMESTIC MARKET, ECONOMIC ACTIVITY, ECONOMIC ANALYSIS, ECONOMIC THEORY, ECONOMICS OF INNOVATION, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EMPLOYMENT, ENTREPRENEURS, EQUIPMENT, EXCHANGE RATES, EXPOSURE, FINANCIAL MARKETS, FIRM PERFORMANCE, FIRMS, FOREIGN COMPANIES, FOREIGN COMPETITION, FOREIGN DIRECT INVESTMENT, FOREIGN FIRM, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN MARKETS, FOREIGN OWNERSHIP, GEOGRAPHIC REACH, GLOBAL ECONOMY, GLOBALIZATION, GROWTH RATES, HUMAN CAPITAL, IDEAS, IMPERFECT INFORMATION, INDUSTRY PRODUCTIVITY, INNOVATION, INNOVATIONS, INSPECTIONS, INTERNATIONAL BUSINESS, INTERNATIONAL TRADE, INTERNATIONALISATION, INVENTION, INVENTIONS, KNOWLEDGE NECESSARY, LABOR ECONOMICS, LABOR FORCE, LABOR PRODUCTIVITY, LABOR REGULATIONS, LEADING, LEASING, LICENSE, LICENSES, LICENSING, MACROECONOMIC LEVEL, MANAGEMENT SYSTEMS, MANUFACTURING, MANUFACTURING INDUSTRIES, MARKET COMPETITION, MARKET ECONOMIES, MARKET SHARE, MARKET STRUCTURE, MARKET STRUCTURES, MARKETING, MATERIAL, MNE, MONOPOLY, MULTINATIONAL, MULTINATIONAL ENTERPRISES, MULTINATIONALS, NETWORKS, NEW PRODUCT, NEW PRODUCTS, NEW TECHNOLOGIES, NEW TECHNOLOGY, OUTPUT, POLITICAL ECONOMY, PRODUCT INNOVATION, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROPERTY RIGHTS, QUALITY MANAGEMENT, R&D, REAL ESTATE, REGULATORY ENVIRONMENTS, RENTS, RESULT, RESULTS, SAFETY, SEARCH, SHAREHOLDER, SKILLED LABOR, SKILLED WORKERS, SMALL FIRMS, STANDARDIZATION, STATE OWNED ENTERPRISE, STOCK EXCHANGE, SUPERVISION, SUPPLIER, SUPPLIERS, SUPPLY CHAIN, TECHNOLOGICAL CHANGE, TECHNOLOGICAL INNOVATION, TECHNOLOGY TRANSFER, THINKING, TIME PERIODS, TRADE LIBERALIZATION, TRANSITION COUNTRIES, TURNOVER, TURNOVER RATE, USES, VARIETY, WORLD ECONOMY,
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 https://hdl.handle.net/10986/4006
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