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

Wang, C and Lu, Y 2020 , 'Can economic structural change and transition explain cross-country differences in innovative activity?' , Technological Forecasting and Social Change, vol. 159 , pp. 1-14 , doi: 10.1016/j.techfore.2020.120194.

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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 structuralchange on innovation. Using a global sample from 1970 to 2012 for a panel of 75 developed and developingcountries with treatments for endogeneity by using physical instruments (2SLS) and the system GMM estimationtechnique, we find a positive significant effect of service sector share and a significant negative impact of theagriculture sector share on innovation. We also find these effects to differ in different economies characterizedby income and structural transition phases. In particular, shifting away from the agriculture sector is found to beimportant for more advanced economies, while the industry sector is important for innovation among uppermiddle income economies. The low income economies generally benefit much less from their structural changeefforts than lower middle, upper middle and high income economies do.

Item Type: Article
Authors/Creators:Wang, C and Lu, Y
Keywords: cross-country study, innovation structural changes, human capital, financial development
Journal or Publication Title: Technological Forecasting and Social Change
Publisher: Elsevier Science Inc
ISSN: 0040-1625
DOI / ID Number: 10.1016/j.techfore.2020.120194
Copyright Information:

Copyright 2020 Elsevier Inc.

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