Drivers of national innovation in transition: Evidence from an eastern European panel

Presented at the GLOBELICS 6th International Conference 2008 22-24 September, Mexico City, Mexico.Innovation plays a crucial role in determining today's economic growth patterns. But what enables some countries to innovate more than others? This study attempts to answer this question by analyzing in premiere a panel of sixteen Eastern European transition countries. It provides a detailed description of innovation by identifying regional differences in terms of historical heritage, technological specialization, commitments and main actors involved in this process, before and after the fall of communism. Secondly, it explores empirically the main drivers of their innovative output, proxied by patents, using a variety of econometric techniques. The results confirm the importance of R&D commitments from both public and private sources, the crucial role of universities and existing national knowledge base. Policy measures such as intellectual property rights protection or the business climate impact significantly the propensity to patent, while measures of transitional downturn and industrial restructuring have an important negative effect. Finally, globalization contributes to developing new innovations via inflows of foreign investment and trade