Enhancing national innovative capacity: The impact of high-tech international trade and inward foreign direct investment

Abstract

Innovation productivity differs across economies and latecomer countries are working hard to close the gap with developed countries. An investigation of 80 countries in the years of 1981–2010 shows that international patenting activities vary across countries. We also find that both high-tech related international export and inward foreign direct investment significantly contributes to emerging countries’ ability to produce cutting-edge technologies, but this effect does not exist for leading innovator countries. Moreover, although this study shows strong intellectual property rights (IPRs) protection is highly correlated with international patenting activities in leading innovator countries, it has a negative impact on emerging innovator countries’ national innovative capacity. The findings thus help better understand the role of international economic activities and IPR in enhancing national innovative capacity, and facilitate emerging countries’ effort to catch up with leading innovator countries.