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Article
Publication date: 1 January 2021

Benjamin Azembila Asunka, Zhiqiang Ma, Mingxing Li, Nelson Amowine, Oswin Aganda Anaba, Haoyang Xie and Weijun Hu

The purpose of this study is to analyze the performance of indigenous innovation in developing countries in the era of trade liberalization. It analyzes indigenous innovation from…

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Abstract

Purpose

The purpose of this study is to analyze the performance of indigenous innovation in developing countries in the era of trade liberalization. It analyzes indigenous innovation from research and development (R&D) investments to innovation output and its effect on economic growth.

Design/methodology/approach

The sample for this study includes 20 middle-income countries across five continents for the period between 1994 and 2018. The study employs the Crepon Duguet and Mairessec CDM model in a panel data setting to do a multistage analysis of the innovation process. A vector error correction model VECM is employed to test for Granger causality between the variables investigated.

Findings

The results show that imports and foreign direct investments (FDI) have generally have short-run and long-run causal effects on domestic R&D investments. In regions where imports and FDI do not have individual causal effects on innovation output, a joint increase in each of them and R&D have both short-run and long-run causal effects. Indigenous innovation is a significant contributor to economic growth when a country can produce and export novel products.

Research limitations/implications

The sample is only limited to developing economies, and due to the unavailability of data, only 20 countries were captured.

Practical implications

Imported products and FDI are critical to the innovation drive when such activities are targeted at enhancing indigenous innovation from R&D to the production of new products. Hence, policy formulation should encourage the absorption of foreign technologies that serve as inputs to indigenous innovation.

Originality/value

This paper focuses specifically on indigenous innovation and analyses the influence of foreign technologies in this effort. It tests the moderating roles of imports and FDI in the relationship between R&D and innovation output, concluding that both variables enhance the effect of R&D on innovation output.

Details

International Journal of Emerging Markets, vol. 17 no. 5
Type: Research Article
ISSN: 1746-8809

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