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Can economic structural change and transition explain cross-country differences in innovative activity?

journal contribution
posted on 2023-05-20, 16:08 authored by Wang, C, Yifan LuYifan Lu
Motivated by the combination of Schumpeter's view on innovation and the Kuznets’ retardation theory concerning structural change introduced by Quatraro (2009), this paper attempts to explain the impact of structural change on innovation. Using a global sample from 1970 to 2012 for a panel of 75 developed and developing countries with treatments for endogeneity by using physical instruments (2SLS) and the system GMM estimation technique, we find a positive significant effect of service sector share and a significant negative impact of the agriculture sector share on innovation. We also find these effects to differ in different economies characterized by income and structural transition phases. In particular, shifting away from the agriculture sector is found to be important for more advanced economies, while the industry sector is important for innovation among upper middle income economies. The low income economies generally benefit much less from their structural change efforts than lower middle, upper middle and high income economies do.

History

Publication title

Technological Forecasting and Social Change

Volume

159

Pagination

1-14

ISSN

0040-1625

Department/School

TSBE

Publisher

Elsevier Science Inc

Place of publication

360 Park Ave South, New York, USA, Ny, 10010-1710

Rights statement

Copyright 2020 Elsevier Inc.

Repository Status

  • Restricted

Socio-economic Objectives

Economic growth; Technological and organisational innovation

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