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Institutional determinants of R&D investment : evidence from emerging markets

Alam, MA; Uddin, MM; Yazdifar, H

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Authors

MM Uddin

H Yazdifar



Abstract

Institutional environment of a country plays an important role for innovation activities. Our results confirm that external environment of emerging countries influence the R&D investment. Using Generalized Method of Moments (GMM) estimation of panel data for 664 firms from selected 20 emerging markets during the period of 2006-2013, we find that institutional quality has significant impact on R&D investment. The results show that government effectiveness, rule of law, and regularity quality have positive impact, while corruption and political instability have negative impact on R&D investment in the emerging markets. We also performed elasticity test to compare among the institutional factors. The results show that among the institutional determinants, corruption of a particular emerging country is found to be most important in influencing R&D investment followed by regularity quality, government effectiveness, rule of law, and political instability. These results would be helpful to investors and policy makers to assess the requirements of sustainable development. The results of this study clearly demonstrate that to attract more R&D investment as a source of sustainable development, government should ensure a sound and stable institutional environment along with strengthening other firm level factors as institutional factors are more important to explain the variation over the time and also cost effective in terms of implementation.

Key Words: Institutional settings, Determinants, R&D investment, Emerging markets, GMM estimation

Citation

Alam, M., Uddin, M., & Yazdifar, H. (2019). Institutional determinants of R&D investment : evidence from emerging markets. Technological Forecasting and Social Change, 138, 34-44. https://doi.org/10.1016/j.techfore.2018.08.007

Journal Article Type Article
Acceptance Date Aug 5, 2018
Online Publication Date Aug 24, 2018
Publication Date Jan 1, 2019
Deposit Date Aug 21, 2018
Publicly Available Date Feb 24, 2020
Journal Technological Forecasting and Social Change
Print ISSN 0040-1625
Publisher Elsevier
Volume 138
Pages 34-44
DOI https://doi.org/10.1016/j.techfore.2018.08.007
Publisher URL https://doi.org/10.1016/j.techfore.2018.08.007
Related Public URLs https://www.journals.elsevier.com/technological-forecasting-and-social-change

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