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New findings on the Factors
Affecting Innovation and
Productivity in
the Caribbean
Supporting A Dynamic Private Sector
Driving Prosperity and Growth
In the Caribbean
Preeya Mohan
SALISES
Compete Caribbean
CELEBRATION & STOCKTAKING EVENT
November 21st & 22nd, 2016
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Barriers to Innovation and Firm
Productivity in the Caribbean
2
Motivation
• Innovation barriers prohibit innovation:
– Only 11% of Caribbean firms engaged in innovative activity
(Mohan et al. 2014).
• Nevertheless little is known about innovation barriers.
• Identifying innovation barriers and their impact are
important for:
– Designing and implementing policies and incentives for firms
to engage in innovation and reduce market failures.
– Provide valuable information for entrepreneurs and managers
when crafting innovation strategies.
3
Innovation Barriers
• Firm categories:
– Innovators
– Potential innovators
– Non-innovators
• Innovation barrier categories:
– Finance or cost factors
– Knowledge
– Market
– Policy and regulatory environment
4
Results
%
70
59
60
50
40
30
26
20
15
10
0
Innovators
Potential innovators
Authors’ compilation using PROTEqIN data.
Non-innovators
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Results
• Innovation barriers negatively affect the decision to innovate- cost
and market coefficients significant.
• Innovation barriers negatively affect innovation expenditure- cost
and market coefficients significant.
• Innovation barriers reduce the probability of innovation:
– Cost barriers reduce innovation by 46%
– Knowledge barriers reduce innovation by 25%
– Policy barriers reduce innovation by 34%
• Innovation barriers do not have a significant impact on labour
productivity.
6
Foreign Direct Investment and
Innovation and Productivity
in the Caribbean
7
Motivation
• FDI is potentially an important channel for innovation and
productivity for local firms in host countries.
• Knowledge transfer and spillover are not an automatic
consequence of FDI.
• Foreign firms are less likely to undertake innovative activityin the Caribbean and only 25% of innovative firms are
foreign owned (Mohan et al. 2014).
• Significant policy relevance since governments place a lot of
effort in attracting FDI:
– FDI inflows into the Caribbean average 10% of annual GDP.
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Results
• Innovative effort by foreign firms, FDI spillover and foreign
influence do not affect firm innovation decision.
• Innovative effort by foreign firms, FDI spillover and foreign
influence do not affect firm innovation expenditure.
• Innovative effort by foreign firms negatively affects innovation.
• Foreign influence positively affects innovation.
• Innovative effort by foreign firms and FDI spillover do not have a
significant impact on labour productivity.
• Foreign influence positively affects labour productivity.
9
Thank you
[email protected]
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