Innovation and productivity in the service sector : the case of Mexico

The study highlights the importance of promoting learning and innovation as the basis for improved productivity. Based on data about service firms in Mexico, the paper analyzes the determinants of innovation in the sector, and of learning and innovation intensity, including how well innovation sways firms’ performance, measured in terms of labor productivity. The determinants of, and barriers to technological innovation are explored from a developing-country perspective, as well as the impact of innovation on service firms’ productivity, and a comparative analysis of manufacturing firms in Mexico. Findings demonstrate that innovation output has a positive impact on firm productivity