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American Economic Journal: Macroeconomics: Vol. 2 No. 2 (April 2010)

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Globalization and Innovation in Emerging Markets

Article Citation

Gorodnichenko, Yuriy, Jan Svejnar, and Katherine Terrell. 2010. "Globalization and Innovation in Emerging Markets." American Economic Journal: Macroeconomics, 2(2): 194-226.

DOI: 10.1257/mac.2.2.194

Abstract

Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data from 27 emerging market economies, we estimate the effects of foreign competition and linkages with foreign firms on innovation by domestic firms. We provide robust evidence of a positive relationship between foreign competition and innovation, broadly defined. The supply chain of multinational enterprises and trade are also important channels. There is no evidence for an inverted U relationship between innovation and foreign competition. Moreover, the relationship between globalization and innovation does not differ across the manufacturing and service sectors. (JEL F02, F23, M16, O33)

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Authors

Gorodnichenko, Yuriy (U CA, Berkeley)
Svejnar, Jan (U MI)
Terrell, Katherine (?)

JEL Classifications

F02: International Economic Order
F23: Multinational Firms; International Business
M16: International Business Administration
O33: Technological Change: Choices and Consequences; Diffusion Processes

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American Economic Journal: Macroeconomics


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