Assessing the Impacts of Market Failures on Innovation Investment in Uruguay

Daniel Bukstein; Elisa Hernández; Ximena Usher

doi:10.4067/S0718-27242019000400137

Authors

Daniel Bukstein Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación and Facultad de Administración y Ciencias Sociales, Universidad ORT Uruguay,
Elisa Hernández Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación
Ximena Usher Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación

DOI:

https://doi.org/10.4067/S0718-27242019000400137

Keywords:

CDM model, financial and non-financial barriers to innovation, innovative firms, Uruguay

Abstract

This paper analyzes the effects of financial and nonfinancial obstacles to innovation on Uruguayan firms. We contribute to the literature by including the role of systemic and institutional factors affecting the different stages of the innovation process. The empirical analysis is based on four waves of national innovation surveys covering firms in the industry and services sector. In line with recent studies, we confine our analysis to the relevant sample of potentially innovative firms. Our results show that market, financial, knowledge, and context obstacles are the most important factors reducing innovation propensity and the amount invested in innovation activities. The effects are similar for firms in the industry and services sectors. We do not find evidence that institutional factors hamper innovation. Investment in equipment and investment in R&D and other intangible activities are affected differently by obstacles. On the other hand, innovation outcomes are affected mainly by financial and market-related barriers. We do not find evidence that obstacles to innovation have a significant impact on labor productivity.

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