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Abstract
The main purpose of the present research is to establish an exploratory picture of innovativeness in Armenia, Azerbaijan, and Georgia. The main trends and key determinants of innovativeness in the South Caucasus have rarely been investigated in mainstream economic research. However, the South Caucasus is a rapidly developing post-Soviet region, and it is geographically strategic for several key players in the global economy, including China and the European Union (EU). In fact, the role of the South Caucasus in international economic agreements is growing due to increased partnerships between Eastern and Western countries. Thus, the region’s current and future innovativeness will determine its integration into global value chains (GVCs). This study employs figure analysis to examine and compare the innovativeness of individual countries and the region as a whole against relevant economic and institutional indicators discussed in the literature. Using scatter plots, a polynomial trendline approach allowed the data to be divided into more meaningful periods of analysis to better understand peaks and dips in national innovativeness in association with selected economic and institutional indicators in the South Caucasus. Overall, the results show that economic growth and economic freedom play an important role in innovativeness in the South Caucasus, while institutional factors present more of a mixed picture. More specifically, the region’s overall innovativeness was positively correlated with rule of law and property rights to a certain extent, but this association was not consistent. In addition, Armenia and Georgia experienced higher growth in national innovativeness between 2011 and 2020, while this growth was weaker in Azerbaijan. This paper’s results may help the South Caucasus countries conceptualize their innovativeness in terms of the region’s overall innovativeness and key economic and institutional variables. Moreover, more sophisticated quantitative techniques and econometric models may be applied in future research.
Highlights
The intensification of globalization, the advancement of scientific communities, and the improvement of human capital have led to an increase in innovative activities among both developing and developed countries (Strahl and Sobczak, 2017)
The Azerbaijani economy grew by 34.47% in 2006 compared to 2005, which represented the highest economic growth in the South Caucasus between 2000 and 2019 and among some other countries
To this end, ongoing trends and discussions were covered in a literature review, and the Innovations Index in Armenia, Azerbaijan, Georgia, and the region as a whole was examined through figure analysis using a polynomial trendline approach
Summary
The intensification of globalization, the advancement of scientific communities, and the improvement of human capital have led to an increase in innovative activities among both developing and developed countries (Strahl and Sobczak, 2017). Schumpeter (1934) pioneered the classification of innovations by identifying new products, production methods, supply sources, markets, and forms of business organization as main types of innovation. The Organisation for Economic Co-operation and Development (OECD) and Eurostat’s (2005) manual define innovation as a newly developed product (either good or services), marketing method or process, or organizational method in business practices, organizations, or external relations. Innovative activities include “all scientific, technological, organizational, financial and commercial steps which or are intended to, lead to the implementation of innovations” Innovative activities include “all scientific, technological, organizational, financial and commercial steps which or are intended to, lead to the implementation of innovations” (OECD and Eurostat, 2005, p. 47)
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