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New findings on the Factors Affecting Innovation and Productivity in the Caribbean

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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New findings on the Factors Affecting Innovation and Productivity in the Caribbean

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  1. New findings on the FactorsAffecting Innovation and Productivity inthe Caribbean Supporting A Dynamic Private Sector Driving Prosperity and Growth In the Caribbean PreeyaMohan SALISES Compete Caribbean CELEBRATION & STOCKTAKING EVENT November 21st & 22nd, 2016

  2. Barriers to Innovation and Firm Productivity in the Caribbean

  3. 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.

  4. Innovation Barriers • Firm categories: • Innovators • Potential innovators • Non-innovators • Innovation barrier categories: • Finance or cost factors • Knowledge • Market • Policy and regulatory environment

  5. Results % Authors’ compilation using PROTEqIN data.

  6. 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.

  7. Foreign Direct Investment and Innovation and Productivityin the Caribbean

  8. 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 activity- in 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.

  9. Results • Innovative effort by foreign firms, FDI spilloverand foreign influence do not affect firm innovation decision. • Innovative effort by foreign firms, FDI spilloverand foreign influence do not affect firm innovation expenditure. • Innovative effort by foreign firmsnegatively 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.

  10. Thank you Preeya.Mohan@sta.uwi.edu

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