2019 (16), №3

Influence of Innovative Activity on the Productivity of Enterprises in Transition Economies



For citation: 

Nagieva, K. M. (2019). Influence of Innovative Activity on the Productivity of Enterprises in Transition Economies. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 16(3), 587-592


The aim of this paper is to assess the impact of individual and averaged local innovations on enterprises productivity. The following basic hypothesis has been put forward: the firms located in cities (regions) with a favorable innovation environment tend to be more productive. The Business Environment and Enterprise Performance Survey (BEEPS) by countries in transition from 2012 to 2014 has been used for the analysis. The ordinary least squares method has been applied to test the hypothesis. Two dimensions of innovations have been used: individual and averaged for firms in the same location (city) within one country. This has been done in order to mitigate the problem of endogeneity associated with a possible reverse causality between innovation and productivity. The results have shown that the innovative activity of firms (both individual and local) leads to an increase in the competitiveness of firms, and the average local innovations have a stronger effect on the total factor productivity compared to the individual ones. This suggests the benefits of geographic concentration of innovations, as well as the need to improve innovation policy measures in the countries studied, in particular, to create conditions for effective interaction of firms in innovative activities.

Karina Mahir-kyzy Nagieva — Post-graduate Student at the Department of Econometrics and Statistics, Research Assistant, Ural Federal University named after the First President of Russia B. N. Yeltsin (Ekaterinburg, Russian Federation; e-mail: nagieva1995@list.ru).