NATIONAL INNOVATION EFFICIENCY DURING THE GLOBAL CRISIS A Cross-Country Analysis Emine Nur Gunay and Gozde Nur Kazazoglu National Innovation Efficiency During the Global Crisis Emine Nur Gunay • Gozde Nur Kazazoglu National Innovation Efficiency During the Global Crisis A Cross-Country Analysis Emine Nur Gunay Ankara, Ankara, Turkey Gozde Nur Kazazoglu Uskudar Istanbul, Turkey ISBN 978-1-137-58254-6 ISBN 978-1-137-58255-3 (eBook) DOI 10.1057/978-1-137-58255-3 Library of Congress Control Number: 2016958204 © The Editor(s) (if applicable) and The Author(s) 2016 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Cover illustration: © Lucian Milasan / Alamy Stock Photo Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Nature America Inc The registered company address is: New York Plaza, New York, NY 10004, U.S.A Emine Nur Gunay would like to dedicate this book to the following people: My husband, Gokhan, who has been a constant source of support and encouragement during the challenges of my academic and political career and who has shared many uncertainties, challenges and sacrifices with me throughout my career path; The memory of my father, Dr Yusuf Cemal Ozkan, who has been my role model in my personal and political life for hard work, persistence, social responsibility and personal sacrifices; My mother, Nurcan Ozkan, who instilled in me the inspiration to set high goals and who supported me with her prayers Prof Emine Nur Gunay-Ozkan Gozde Nur Kazazoglu would like to dedicate this book to the following people: My precious mother, Nergis Colak, who always supported me in times of adversity and helped me to gain self-confidence with her amazing courage, dignified stance and power throughout her life; My precious father, Aydın Kazazoglu, who always supported me in times of adversity and helped me to realize what life is in my early ages; My lovely husband, Oguz Sahin, who always encouraged me about my capabilities and has been an amazing friend for years; My grandfather, Dr Serif Kazazoglu, and my uncle, Prof Ali Rıza Kazazoglu, who always have been my role models in my education and career path with their hard and continuous work Gozde Nur Kazazoglu Sahin Preface Globalization and the rise of the use of information and communication technologies (ICT) have shifted the comparative advantage of economies towards the factors of knowledge, innovation and technology Therefore, the knowledge-based economy plays a rather important role as far as sustainable growth and competitiveness enhancement are concerned On the other hand, the rise of a knowledge-based economy creates new challenges for business, policymakers and academia because the internal dynamics of the firms, sectors, countries and regions differ greatly Therefore, building a unique innovation system based on a nation’s own dynamics is a real challenge for policymakers, especially during economic crisis The Global Financial Crisis of 2007–2009, followed by the Euro Crisis, changed the world economic and social balance The effect of the global crisis on firms, sectors, countries and regions in terms of the intensity of the shock and the recovery process has also been uneven Some countries have emerged stronger from the crisis by making sound choices, implementing reforms and focusing their innovative energies on sustainable growth, while others have suffered severe economic contraction and high unemployment rates In that context, this study underlines the role and the definition of the knowledge-based economy, its relationship to innovation, and national innovation efficiency by analyzing the inputs used and outputs created in the 2000s, including during the period of the Global Financial Crisis The aim of this study is to trace the efficiency of national innovation systems for 58 countries from 2000 to 2014, and to display the effects of the Global Financial Crisis on that efficiency by comparing and grouping vii viii Preface countries according to their GDP and GDP per capita This study makes comparison possible and thus this study will guide policymakers in developing new policies by using the results of the comparison We wish to acknowledge Palgrave Macmillan and our editors Sarah Lawrence and Allison Neuburger for their sincere support and for maintaining high standards during the publication process We are also grateful to the anonymous reviewers whose comments improved the manuscript enormously Last but not least, we thank the Bogazici University Research Fund for their support of the project “Knowledge-Based Economy and Economic Development: A Cross-Country Analysis,” project code 7080 Ankara, Ankara, Turkey Uskudar Istanbul, Turkey Emine Nur Gunay-Ozkan Gozde Nur Kazazoglu Sahin Contents 1 Introduction 1 Bibliography 4 2 Defining Knowledge and the Knowledge-Based Economy 5 From Classical Production Functions to Knowledge-Based Economy 5 Definitions of Knowledge-Based Economy 8 Definition of Innovation and National Innovation Systems 14 Evolution of Innovation 15 National Innovation Systems 20 Bibliography 23 3 Measuring Knowledge and Innovation 27 Why and How to Measure Knowledge 28 Indices Measuring Innovation and Knowledge-Based Economy 31 ICT Development Index (IDI) 32 Measuring Information Society (MIS) 36 Technology Achievement Index (TAI) 39 IT Industry Competitiveness Index (IT-CI) 42 Networked Readiness Index (NRI) 45 European Innovation Union Scoreboard (IUS) 47 OECD Science, Technology and Industry Scoreboard (STI) 52 Global Competitiveness Index (GCI) 54 Global Innovation Index (GII) 59 ix x Contents Conclusion 65 Bibliography 66 4 National Innovation Efficiency During the Global Financial Crisis Period and Afterwards 69 Advantages and Disadvantages of the DEA Model 73 Methodology and Data 78 Empirical Findings and Results 82 Summary of Emprical Findings and Results 153 Bibliography 161 5 Policy Implications 165 Bibliography 171 Index 173 Acronyms/Abbreviations ASEAN Association of Southeast Asian Nations BCC Banker, Charner and Cooper BERD Business Expenditure on Research and Development BRICS Brazil-Russia-India-China-South Africa BRIICS Brazil-Russia-India-Indonesia-China-South Africa CCR Charnes, Cooper and Rhodes CRS Constant Return to Scale DEA Data Envelopment Analysis DMU Decision Making Unit DRS Decreasing Returns to Scale EPO European Patent Office EU European Union EUROSTAT European Union Statistical Office FDI Foreign Direct Investment G7 Canada, USA, Japan, UK, Germany, France, Italy GCI Global Competitiveness Index GCR Global Competitiveness Report GDP Gross Domestic Product GERD Gross Expenditure on Research and Development GII Global Innovation Index GOVERD Government Intramural Expenditure on Research and Development HERD Higher Education Expenditure on Research and Development ICT Information and Communication Technology IER Innovation Efficiency Ratio IRS Increasing Returns to Scale IT Information Technology xi POLICY IMPLICATIONS 169 According to the actions taken above, it is underlined that in addition to the measures fostering innovation based sustainable and inclusive growth, further and consequent actions and innovative policies should be applied to funding mechanisms, supply of human resources, specialization, institutional and infrastructural challenges (especially in financial sector) and forming science-industry linkages In light of this: –– Stability of funding should be maintained –– This stability can be maintained by loans, grants and venture capital, which should be chosen according to the internal dynamics of the country such as legal infrastructure, banking and finance infrastructure and the level of innovation capabilities (whether the idea is at the stage of commercialization or at the stage of advance research and development) –– Due to the pressure on the public funding, public-private cooperation and coordination should be sought for further R&D mechanisms –– There should be a shift from institutional funding mechanisms to project-based competitive research funding mechanisms to maintain a certain quality of projects and increase the probability of commercialization –– Funding and grant mechanisms should be prioritized for certain sectors and if needed an umbrella organization should be established in order to avoid duplication in funding and grant opportunities and to minimize the waste of scarce resources This can be maintained either by consolidation of the budgets and funds or by a mutual action while deciding on the sectors to be funded –– The prioritized areas of funding should be consistent with demand from the market and the long-term goals of the country –– Countries should analyze the sectors and the target group of companies in detail before establishing funding mechanisms Presenting opportunities for young entrepreneurs, young startups and new technology-based small- and medium-sized firms through tax incentives, funding mechanisms and mentoring can be crucial but can also be inefficient when the internal dynamics of the country is fully taken into account –– It is important to maintain an export-oriented economic growth Commercializing every patent or piece of research would be impossible but presenting a longer-term mentorship and export promotion strategy for growing companies is crucial 170 E.N GUNAY AND G.N KAZAZOGLU The aim of this study was to provide detailed information about the knowledge-based economy, to show the trend in national innovation systems efficiency of the studied countries from 2000 to 2014 and how and why innovation became so crucial for sustainable growth after the 2007 crisis This research also shows how countries’ innovation efficiency was affected by the 2007 financial crisis and how the trend of innovation efficiency changed according to each country between 2007 and 2014 By grouping these countries according to GDP and GDP per capita, the study underlines how countries in the same GDP or GDP per capita group could have different innovation efficiency ratios As underlined previously, since countries have more power to control their inputs rather than their outputs, input-oriented models are preferred In addition, since applying constant returns to scale in the DEA model ignores country-specific scale differences, various returns to scale reflect more practical results Applying the same model with a time-lag assumption of two years gives a chance to see how the inputs in previous years turned into outputs over a certain period of time As a result of all these arguments, an input-oriented BCC base and lag model is suggested for further analysis Briefly, this study contributes to the literature in the following ways: –– By examining the years from 2000 to 2014 under two models, the base model and the two-year lag model, –– By analyzing 58 countries and grouping them according to their GDP and GDP per capita; –– By presenting a study of 58 countries conducted with CCI and BCCI models Limitations of this study mainly arise due to the fundamentals of data envelopment analysis and lack of consistent data, especially for the emerging countries First of all, data envelopment analysis assumes one or more DMU as the most efficient one and constructs the efficiency frontier on this assumption Thus, the efficiency frontier responds simultaneously to any change that occurs in the list of DMU, input or output As a result of responsiveness of the frontier, adding another input and output, or any change in the grouping of the countries may lead to changes in efficiency rankings and ratios Secondly, lack of consistent, updated and open data for a wide range of country groups limits the further research, including a broader time range and more countries In order to maintain the results for all years and for all countries and to eliminate the missing POLICY IMPLICATIONS 171 data problem, the closest year’s data or the average data of the year before and year after is taken Thus, any update in the dataset may lead to a shift in the efficiency frontier, affecting the whole set of results For future studies, much can be done First of all, the grouping system used in this study can be applied to Global Innovation Index measurements In the GII, countries are ranked according to their development level after being analyzed as a whole Thus, in the efficiency ranking of the GII, small countries are mostly higher in the rankings in comparison with developed and developing countries In order to avoid ‘small country phenomena’, the GDP and GDP per capita groupings should be applied to GII reports Furthermore, a deeper analysis of the countries that achieved a higher efficiency average after the crisis can be conducted to observe the policy implementations and to understand the common dynamics of the countries In addition, in order to find the fundamental reasons for the low efficiency of the countries, a NUTS region base study can be conducted Since every region’s inputs differ from one another, it is extremely important to conduct regional development and innovation system plans Taking a step further and deepening this study at the regional level will enable policymakers to measure the innovation efficiency of regions and to compare various regions with high income per capita to low income per capita to set their program calls for projects in the areas predetermined by the deficiencies of innovation efficiency Transferring resources between sectors and organizing the strategic priorities of the region accordingly will definitely enhance the knowledge and innovation lead by the region and strengthen the regional welfare Bibliography Izsak, Kincsö, et al 2013 The Impact of the Crisis on Research and Innovation Policies Study for the European Commission DG Research by Technopolis Group Belgium and Idea Consult Lot https://ec.europa.eu/research/ innovation-union/pdf/expert-groups/ERIAB_pb-Impact_of_financial_crisis pdf Accessed 11 Nov 2015 Organization for Economic Co-Operation and Development 2013b Maximising the Benefits of R&D Tax Incentives for Innovation OECD Publishing http:// www.oecd.org/sti/rd-tax-incentives-for-innovation.pdf ———.2013c Innovation Vouchers http://www.oecd.org/innovation/ policyplatform/48135973.pdf Index A Africa, 36–8, 44 Albania, 36 Andorra, 33, 35 Angola, 62, 64, 65 Arab States, 36 Argentina, 41, 59, 60, 62, 63, 77, 83, 84, 87, 90, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127–9, 137, 140, 143, 146, 148, 150, 153, 154, 156, 158–61 Asia, 33, 36, 37 Asian Tiger, 27, 45 Australia, 27, 34, 35, 37–41, 43–6, 48, 53, 56, 63–5, 75, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156 Austria, 38, 39, 49, 51, 63, 74, 75, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127–9, 136, 139, 142, 145, 148, 154, 156, 158–61 B Bangladesh, 41 Banker, Charnes and Cooper (BCC) input oriented, 70, 71, 82, 90, 112, 127, 148, 170 output oriented, 70, 71, 82, 112 base model, 82–4, 90, 91, 100, 106, 112–15, 121, 127–36, 142, 148–54, 156, 160, 161, 170 Belarus, 33, 35 Belgium, 2, 49, 51, 63, 75, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 160, 161, 167 Bosnia and Herzegovina, 36 brain drain, 165, 166 Brazil, 27, 34, 35, 38–41, 44–7, 53, 55–60, 63, 64, 78, 83, 84, 87, 90, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127–9, 137, 140, 143, 146, 148, 154, 156, 158, 160 © The Author(s) 2016 E.N Gunay, G.N Kazazoglu, National Innovation Efficiency During the Global Crisis, DOI 10.1057/978-1-137-58255-3 173 174 INDEX Brazil, Russia, India and China (BRIC), 27, 33, 40, 62 Brazil-Russia-India-China-South Africa (BRICS), 44, 48, 52, 55, 78 Brazil-Russia-India-Indonesia-China- South Africa (BRIICS), 53 BRIC See Brazil, Russia, India and China (BRIC) BRICS See Brazil-Russia-India-ChinaSouth Africa (BRICS) broadband fixed, 37–9, 54 mobile, 36, 38, 39 Broadband Commission for Digital Development, 37 Bulgaria, 49, 51, 63, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 117, 120, 123, 126, 127, 138, 141, 143, 147, 148, 154, 157, 158, 166 business cycle, environment, 44, 45, 47, 59 sophistication, 57, 58 business enterprise expenditure, 53 on research and development, 53, 54, 77 C Cambodia, 40 Canada, 2, 40, 41, 43, 44, 48, 53, 63, 65, 74, 75, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156 Cape Verde, 33 capital, 2, 5–7, 13, 14, 22, 28, 29, 44, 45, 52, 76, 167–9 venture, 52, 167, 169 capital accumulation, 7, 13, 22 Charnes, Cooper and Rhodes (CCR) input oriented, 70, 82, 90, 112, 127, 148 output oriented, 70, 82, 112 Chile, 41, 63, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 137, 140, 143, 146, 148, 154, 156, 168 China, 2, 27, 34, 35, 38–41, 44, 46, 52–7, 60, 62–5, 77, 78, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 138, 141, 143, 147, 148, 154, 156, 160, 161, 167, 168 cluster geographical, 29 industrial, 29 Colombia, 59, 60, 63, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 138, 141, 143, 147, 148, 154, 156, 158, 160, 161 community design, 50 community trademark, 50–2 comparative advantage, vii, competition, 5, 8, 22, 36, 46, 47, 61, 128 competitive advantage, 5, 8, 10, 12, 15, 18, 19, 22, 28, 29, 165 constant returns to scale (CRS), 70–6, 78, 82, 90, 129, 170 input oriented, 70, 71, 75, 82, 90 cooperation, 12, 13, 20, 52, 138, 139 coordination, 12, 13, 20, 169 corruption, 57, 128 Cote D’Ivoire, 62, 64, 65 country specific factors, 20, 55, 61 creative destruction, 6, 14 creative industry, 30 credit, 2, 61, 168 crisis financial, vii, 1–3, 5, 15, 22, 23, 65, 69–161, 165, 166, 170 INDEX global, vii, 1, 78, 82, 83, 128, 129, 150, 153, 159–61, 165, 167 sovereign debt, 166 Croatia, 49, 51, 63 Cybercrime, 43 Cyprus, 41, 49, 51, 63, 79 Czech Republic, 49, 51, 63, 83, 97, 127, 148, 154, 156, 159 D data envelopment analysis (DEA), 3, 70–8, 82, 90, 112, 170 decision making unit (DMU), 22, 69–71, 73, 74, 77, 79, 170 decreasing returns to scale (DRS), 77, 97–9 demand pull, 16–18 Denmark, 33–6, 43, 44, 49, 51, 62, 63, 65, 75, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157 digital divide, 30, 32, 36, 42, 45 digital gap, 42 racial, 42 DMU See decision making unit (DMU) DRS See decreasing returns to scale (DRS) dynamic adopters, 40, 41 dynamics, superstar, 10, 18 E Economic and Social Research Council, 11 education higher, 57, 77, 132 primary, 58, 132 tertiary, 52, 54, 76, 79, 81 upper secondary level, 50 175 efficiency average, 83, 90, 112, 113, 127–30, 132, 148–50, 153, 158–60 driven, 12, 55, 132, 148 frontier, 70–5, 112, 170, 171 operational, 168 price, 69 production, 69 productive, 69, 70 relative, 70, 78 scale, 70, 72, 74 score, 70, 73, 76, 78, 79, 82, 90, 113, 127–30, 149 technical, 69, 70 e-government, 43, 54 Egypt, 59, 60, 63, 83, 84, 87, 90, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127–9, 138, 141, 143, 147, 148, 150, 153, 155, 157–9 electricity, 7, 78, 80 consumption, 80 employment, 12, 43, 47, 48, 50, 52, 54 enrollment gross enrollment ratio, 32, 40 rate, 76 entrepreneurship, 5, 7, 12, 13, 54, 76, 167 entrepreneur, 54, 167 Estonia, 41, 49, 51, 63, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 117, 120, 123, 126, 127, 136, 139, 142, 145, 148, 154, 157, 159 EU See European Union (EU) Euro Area, 53 Euro Crisis, vii, 1, 2, 160, 166 Europe, 2, 33, 36, 38, 47, 48, 52, 166 European Commission (EC), 48, 50, 51, 53, 166 176 INDEX European Innovation Union Scorecard, 31, 42 European Patent Office (EPO), 74 European Union (EU), 2, 30, 41, 47–54, 76, 167 evolutionary economics, 20 ex-ante systems, 21 exotic country, 83 export, 27, 28, 78, 81, 128, 167, 169 oriented, 27, 167, 169 ex-post systems, 21–2 externality negative, 29, 166 positive, 18 F factor, vii, 8, 9, 12, 13, 15, 16, 19, 20, 22, 37, 42, 55, 57, 61, 69, 73, 74, 76, 128, 132, 148 driven, 12, 132, 148 FDI See foreign direct investment (FDI) Fiji, 33 Finland, 33–6, 38–41, 43–6, 51, 55–7, 62, 63, 65, 75, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157 firm, vii, 1–3, 9, 10, 12, 14, 15, 17–20, 29, 41, 48, 49, 51, 54, 69, 128, 165, 167, 169 specific, 9, 18, 19 fiscal policy, 166 contractionary, 166 flat world, 21 foreign direct investment (FDI), 79–81, 127–9, 159 France, 2, 49, 51, 63, 75, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 158, 160, 161, 167 Friedman, Milton, Fritz Machlup, funding, 2, 54, 166–9 G G7, 1, 53, 78 GDP See gross domestic product (GDP) Germany, 33, 34, 41, 44, 51, 55, 56, 62–5, 74, 75, 77, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 160, 168 Global Competitiveness Framework, 132 Global Competitiveness Index (GCI), 31, 42, 54–9, 60, 127, 135 Global Competitiveness Report (GCR), 54, 55 Global Information Technology Report (GITR), 45 Global Innovation Index (GII), 31, 42, 59–65, 83, 168, 171 goods market, 55, 57–60 graduate, 50, 79, 80 grant, 13, 166, 169 Greece, 2, 33, 35, 41, 49, 51, 63, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157, 166 gross domestic expenditure, 76, 77 on research and development (GERD), 54, 76–8 gross domestic product (GDP), viii, 1, 3, 11, 15, 22, 27, 28, 30, 37, 45, 48, 54, 58, 59, 65, 66, 74, 76, 78, 80, 81, 83, 115, 118, 121, 124, 127–30, 132, 133, 136, 139, 142, 145, 148–51, 153, 154, 156, 158–61, 167, 170, 171 INDEX per capita-, viii, 3, 28, 37, 65, 81, 136, 139, 142, 145, 148–51, 153, 154, 158–61, 170, 171 Gross national income (GNI), 37, 38, 39, 46 growth endogenous, 15, 19 exogenous, 5, 19 inclusive, 36, 37, 48, 167, 169 innovation driven, 66, 168 smart, 48 Solow growth model, 19 sustainable, vii, 6, 48, 170 upward, 30 Guinea, 62 H health, 55, 58, 69, 132 Hong Kong, 33, 34, 41, 55–7, 63, 65, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157, 160 hub, 54, 61 human capital, 2, 5, 6, 13, 43–5, 61 Hungary, 2, 49, 51, 63, 77, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127–9, 137, 140, 143, 146, 148, 155, 157, 158, 160, 166, 168 hyperconnectivity, 9, 21 I Iceland, 2, 33–6, 38, 39, 41, 48, 63, 76, 77, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 117, 120, 123, 126, 127, 136, 139, 142, 145, 148, 154, 157 imitation, 14, 18, 166 import, 20, 28, 58 177 incentive, 12, 20, 166, 167, 169 income high, 22, 44–7, 62, 65, 171 low, 45–7, 171 low middle, 45 middle, 15, 22, 45, 66 middle income trap, 15, 27, 66, 165 upper middle, 27, 45 increasing returns to scale (IRS), 70, 77, 90, 97–9 India, 27, 34–6, 38–41, 44–7, 53, 55–60, 63, 64, 77, 78, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 138, 141, 144, 147, 148, 155, 156, 160, 161, 168 Indonesia, 27, 34, 35, 37–40, 44–6, 56, 57, 59, 60, 62–4, 83, 84, 87, 91, 94, 97, 100, 103, 106, 109, 115, 118, 121, 124, 127, 138, 141, 144, 147, 148, 155, 156, 158, 160, 161 Industrial Revolution, inequality, 30, 36, 48 infinite expansibility, 10 inflation, 58 information actionable, 9–10 age, society, 33, 37 information and communication technologies (ICT) access, 31, 33, 34, 37 affordability of, 36, 47 development, 31–6 impact, 33, 46 infrastructure, 32, 36, 42, 165, 168 intensity, 33 market competitiveness, 31 readiness, 33, 47 skill, 31, 33, 35 usage, 27, 31, 32, 46, 79 178 INDEX Information and Communication Technologies Development Index, 31–6 Information Technologies Industry Competitiveness Index (IT-CI), 31, 42–5 innovation based strategy, 27 capability, 18, 31, 78–80, 128, 169 capacity, 20, 27, 29, 78, 81 chain link model of, 16, 17, 19 continuous, 18 creation, 5, 76 diffusion of old, 39, 40 diffusion of recent, 39–41 driven, 55, 58, 66, 132, 148, 168 driver, 52, 76 efficiency, vii, 3, 15, 21, 22, 59, 61, 62, 64, 65, 69–161, 165, 170, 171 efficiency ratio (IER), 3, 61, 62, 65, 170 expenditure, 51 follower, 49, 51 innovative, 20, 52, 167–9 leader, 52 linear model of, 15, 16, 20 measuring, 3, 31–2 open, 29, 61 performance, 48, 49, 52, 76, 82 policy, 2, 54, 82, 167 political, radical, 15 social, 15 system, vii, 2, 3, 12, 15, 21, 23, 77, 160, 171 technical, 15 technological, 6, 8, 14, 39 innovator moderate, 49 modest, 49, 51 input, vii, 3, 10, 11, 16, 23, 28, 31, 32, 39, 44, 49, 59, 61, 62, 65, 69–71, 73–82, 90, 112, 127, 129, 148, 159, 165, 170, 171 institution institutional, 23, 59 national, 3, 20, 166 integrated model, 17, 18 intellectual, 9–11, 18, 21, 29, 51, 76, 78 property, 10, 11, 18, 29, 76, 78 International Organization for Standardization, 80 international standard classification of activities (ISIC), 30 Internet, 9, 42, 46, 47, 57, 79, 81, 168 security, 43 invention, 6, 10 inventor, 10, 11 investment, 1, 2, 6, 13, 15, 16, 19, 28, 29, 32, 43, 48, 50–2, 61, 82, 127, 128, 159–61, 165, 167, 168 investor angel, 13 protection, 57, 58 Iran, 41 Ireland, 2, 37, 38, 43, 44, 49, 51, 62, 63, 65, 74, 75, 84, 87, 91, 94, 97, 100, 103, 106, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157, 166–8 ISO 9001, 80, 81 Israel, 41, 43, 44, 63, 83, 84, 87, 91, 94, 97, 100, 104, 107, 109, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 150, 153, 154, 157–9 Italy, 2, 49, 51, 63, 75, 83, 85, 88, 91, 94, 98, 100, 104, 107, 109, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 166 INDEX J Japan, 2, 15, 33, 35, 37, 38, 40, 41, 44, 46, 48, 52–7, 63, 66, 75, 77, 78, 83, 85, 88, 92, 94, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 160 judicial independence, 58 K Kenya, 47 know-how, 5, 13, 14, 21, 79 knowledge accidentally acquired, back and forth, 20 codified, 13, 21 commercial, 10 commercialization of, 29 creation, 15, 18, 76 diffusion, 13, 79, 166 dissemination of, 10, 11 distribution of, 10 divide, 30 economy, 9, 11, 12, 29, 48 externalities of, 29 fluidity of, 21 global, 12 impact, 61, 80, 81 industry-based, 18 input, 10, 28 intellectual, 9, 21 intensive, 11, 13, 29, 30 intensive sector, 29, 30 measuring, 3, 27–66 non-excludability of, 10 output, 28, 29 pastime, practical, spritiual, stock, 11, 20, 28, 29 179 tacit, 13, 14, 18, 21, 28, 29, 61 worker, 29, 30 knowledge-based economy, vii, viii, 3, 5–23, 28–32, 37, 42, 165, 168, 170 inclusiveness of, 29, 30 know-what, 13, 14 know-who, 13, 14 know-why, 13, 14 KoK Report, 30 Kuwait, 37, 38, 62 L labor cost, 28 diversification of, 29 force, 13, 57, 59 market, 3, 57–9 productivity, 69 talent, 59 lag model, 82, 83, 87, 90, 94, 103, 109, 112, 118, 124, 127–35, 139, 145, 148–53, 158–61, 170 Latin America, 58, 83 Latvia, 49, 51, 63, 85, 88, 92, 95, 98, 101, 104, 107, 110, 117, 120, 123, 126–8, 137, 140, 143, 146, 148, 155, 157, 160, 161, 166 leader, 40, 41, 52 potential, 40, 41 learning, 19, 20, 22, 28, 29 learning by doing, 19, 20 legal environment, 43–5 Leon Kondratiev, 6, wave, 6, license, 40, 43, 50, 52 Lisbon Strategy, 30 Lithuania, 38, 49, 51, 63, 85, 88, 92, 95, 98, 101, 104, 107, 110, 117, 120, 123, 126, 127, 137, 140, 143, 146, 148, 155, 157, 160, 168 180 INDEX local dynamics, 59, 61 need, 12 localization, 41 Luxembourg, 33–6, 40, 46, 49, 51, 62–5, 83, 85, 88, 90, 92, 95, 98, 101, 104, 107, 110, 117, 120, 123, 126–9, 136, 139, 142, 145, 148, 153, 154, 157, 158, 160, 161 M Macao, 37, 38 Macedonia, 48 Malaysia, 59, 60, 63, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127, 137, 140, 143, 146, 148, 155, 157 Mali, 62 Malta, 33, 34, 49, 51, 62–5, 79 market efficiency, 11, 57–9, 132 emerging, 58, 59, 128, 168 rivalry, 18 size, 27, 58, 81 sophistication, 61 MAVINS See Mexico-Australia- Vietnam-Indonesia-Nigeria-South Africa (MAVINS) Measuring Information Society (MIS), 31, 32, 36–9, 46 Mexico, 27, 34–6, 38–41, 44, 46, 47, 56, 60, 63, 64, 77, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 137, 140, 143, 146, 148, 155, 156, 160, 161 Mexico-Australia-Vietnam-IndonesiaNigeria-South Africa (MAVINS), 27, 33, 34, 40, 45, 56 mobile internet, 46 phone, 46 subscription, 79–81 tariff, 47 Moldova, 62, 64, 65 Monaco, 36 multiplier effect, 21, 28, 30 N nanotechnology, national firm, 20 savings, 58 National innovation capacity, 20 national innovation efficiency, vii, 3, 21, 69–161 national innovation strategy, 22, 82, 168 national innovation system (NIS), vii, 2, 3, 12, 14–22, 75, 77–9, 90, 112, 170 Neo-Schumpeterian economics, 7, 8, 12, 20 theory, 12 Netherlands, 2, 33–40, 42–6, 49, 51, 55, 56, 62–5, 74, 75, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 154, 156, 160, 166 network, 14, 20, 28, 29, 39, 42, 45, 46, 54, 165, 166 networking model, 17, 18 Network Readiness Index (NRI), 31, 42, 43, 45–7 new normal, New Zealand, 44, 63, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127, 136, 139, 142, 145, 148, 154, 157 INDEX Nigeria, 27, 34–41, 44–6, 56, 59, 60, 62–4, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 138, 141, 144, 147, 148, 155, 156, 160, 161 North America Free Trade Area (NAFTA), 53 North Korea, 79 Norway, 33–9, 45, 46, 48, 63, 75, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 136, 139, 142, 145, 148, 153, 154, 156, 160, 161 NRI See Network Readiness Index (NRI) O OECD See Organisation for Economic Co-Operation and Development (OECD) OECD Science, Technology and Industry Scoreboard, 31, 42, 52–4 Offshoring, oil, 7, 80, 81 Oman, 33 one-size fits all, 11, 22 online, 47, 61 creativity, 61 Organisation for Economic Co-Operation and Development (OECD), 2, 3, 11, 13–15, 21, 28–31, 42, 44, 45, 47, 52–4, 76–8, 167, 168 Science, Technology and Industry Outlook, outlier, 73, 77–9 output, vii, 3, 10, 22, 23, 28, 29, 32, 39, 48–50, 54, 61, 62, 65, 69–82, 90, 112, 128, 129, 159, 165, 170 creative, 32, 61 181 P Pacific, 33, 36 Pakistan, 41, 59, 60, 63, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127, 128, 138, 141, 144, 147, 148, 155, 157, 158, 161 patent system, 11 triadic patent family, 54 penetration broadband, 43, 79 internet, 47 mobile, 43, 47 Peru, 41, 64, 83, 85, 88, 90, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127–9, 138, 141, 144, 147, 148, 153, 155, 157–61 Philippines, 59, 60, 64, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127, 138, 141, 144, 147, 148, 155, 157 Poland, 27, 33–6, 38–41, 44, 46, 51, 56, 59, 60, 62, 64, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 137, 140, 143, 146, 148, 155, 156, 158, 160, 167 population, 12, 27, 30, 36, 47, 48, 50, 52, 54, 57–9, 74, 76–81 digital native, 36 Porter, Michael E., 5, 7, 18, 22, 28 Five Forces, 18 Portugal, 2, 49, 51, 64, 83, 85, 88, 90, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127–9, 136, 139, 142, 145, 148, 154, 156, 158–61, 166–8 post-Fordism, poverty, 48 182 INDEX power of buyers, 18 of suppliers, 18 price, 8, 36–9, 47, 69, 70, 79 pricing, 8, 37, 41 priority, 2, 32, 167 private sector, 6, 20, 21, 43, 160 privatization, 47 producer, 11, 16 production classical, 5–8, 14, 22, 28 continuous, efficiency, 69 flexible, fordist, frontier, 70, 77 function frontier, 14 mass, 5, small batch, productivity, 19, 22, 31, 55, 66, 69, 70, 81 profit, 57, 167 property, private, 43 prosperity, 14, 55 public authority, governance, 57 institutions, 59, 74 and private sector partnership, 21 sector, 6, 8, 12, 43, 50, 70 spending, public expenditure, 168 on research and development, 168 Q Qatar, 38, 39 R recession, 2, region, vii, 1, 2, 15, 36, 78, 166, 171 regional innovation, 15, 168 regulatory environment, 46, 47, 61 research infrastructure, 80, 81 joint industry, 21 open, 51 scientific, research and development expenditure, 22, 28, 69, 159, 166 personnel, 53, 79 private, 44 public, 54, 165 researcher, 1, 28, 53, 54, 76–81, 166, 167 resource allocation, 30 driven, 66 efficient, 15, 48, 62 human, 41, 50–2, 79–81, 165, 169 national, 12 scarce, 12, 23, 29, 62, 166, 168, 169 waste of, 166 Romania, 41, 50, 51, 64, 76, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 119, 122, 125, 127, 137, 140, 143, 146, 148, 155, 156, 158–61, 166, 167 Russia, 27, 34, 35, 37–40, 44–7, 53, 55, 56, 59, 60, 64, 66, 77, 78, 127–9, 148, 158 S Saudi Arabia, 60 Science Citation Index (SCI), 74 scientific article, 78 scientific co-publications, 50–2 Scientific Journal Rankings (SJR), 80 seed investment, 167 Serbia, 48, 78 service, 8, 11, 14, 15, 30, 31, 36–8, 47, 50, 58, 61, 165, 168 Singapore, 37–41, 43–6, 55, 56, 62, 64, 65, 83, 85, 88, 92, 95, 98, INDEX 101, 104, 107, 110, 116, 119, 123, 125, 127, 136, 139, 142, 145, 148, 154, 156, 159 skill digital, 41 skilled, 2, 6, 12, 13, 29, 58, 166 skilled labor, 29, 58 skilled workers, 2, 13 Slovakia, 49, 51, 64, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 117, 120, 123, 126, 127, 137, 139, 142, 146, 148, 154, 157, 160 Slovak Republic, 77 Slovenia, 33, 35, 41, 49, 51, 64, 77, 85, 88, 92, 95, 98, 101, 104, 107, 110, 117, 120, 123, 126, 127, 137, 139, 142, 146, 148, 154, 157 small and medium size enterprise (SMEs), 2, 50–2, 168 small country bias, 65 SMEs See small and medium size enterprise (SMEs) software, 8, 31 South Africa, 27, 34, 35, 38–41, 44, 46, 47, 53, 55, 56, 59, 64, 78, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 117, 119, 123, 126, 127, 138, 141, 144, 147, 148, 155, 156, 158, 161 South Korea, 15, 27, 33–5, 38–41, 44, 46, 48, 52–4, 56, 59, 64, 66, 77, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 115, 118, 121, 124, 127, 137, 140, 142, 146, 148, 154, 156, 160 Spain, 2, 3, 33, 35, 49, 51, 64, 75, 83, 85, 88, 90, 92, 95, 98, 101, 104, 107, 110, 115, 118, 122, 125, 127, 137, 140, 142, 146, 148, 150, 154, 156, 158–61, 166 specialization, 2, 6, 28, 54, 160, 166, 168, 169 smart, 2, 54, 166 183 spillover, 18, 128 statistical noise, 73 stochastic frontier approach, 73 support package, 166 sustainable, vii, 5, 6, 15, 23, 41, 48, 62, 165–70 Swaziland, 62 Sweden, 33–6, 38–41, 43–6, 49, 51, 55, 56, 62, 64, 65, 75–7, 83, 85, 88, 92, 95, 98, 101, 104, 107, 110, 116, 118, 122, 125, 127, 137, 140, 143, 146, 148, 154, 156 Switzerland, 2, 33, 34, 36–9, 46, 48, 55, 56, 62, 64, 65, 74, 75, 83, 85, 88, 92, 95, 98, 101, 105, 107, 110, 116, 119, 122, 125, 127, 137, 140, 143, 146, 148, 154, 156, 160 systems integration, 17, 18 T Taiwan, 44, 64, 75, 79 tax exemption, 167 rate, 57 subsidy, 167 technology creation of, 39–41, 77 diffusion of, export, 28, 40, 80, 81 high, 5, 29, 30, 32, 80, 81, 128 high technology export, 28, 80, 81 high technology product, 29 high technology sector, 29 low technology sector, 29 medium-low, 28 medium technology sector, 29 push, 16–18 technological intensity, 29 technological readiness, 55, 57, 58, 132 184 INDEX Technology Achievement Index (TAI), 31, 39–43 terrorism, 58 Thailand, 33, 59, 60, 64, 83, 85, 89, 92, 95, 99, 101, 105, 107, 111, 117, 120, 123, 126, 127, 138, 141, 144, 147, 148, 155, 157, 161, 168 think tanks, 12 threat of new entrants, 18 of substitutes, 18 time lag, 3, 76, 77, 82, 83, 87, 90, 94, 97, 103, 109, 112–14, 118, 124, 127–8, 130–5, 139, 145, 148–54, 156, 158–61, 168, 170 tourism, 167 trade, 53, 57, 61, 128 tariff, 57 transformation, 9, 12, 15–17, 20, 55, 57, 58, 73, 76, 82 Triple Helix, 8, 15, 20, 22, 61, 164, 166 Turkey, 27, 33–41, 44, 46–8, 51, 54–6, 58–60, 62, 64, 83, 86, 89, 90, 93, 95, 99, 101, 105, 108, 111, 116, 119, 122, 125, 127–9, 137, 140, 143, 146, 148, 150, 153, 155, 156, 158–61, 168 U UK See United Kingdom (UK) Ukraine, 41, 64, 83, 86, 89, 93, 95, 99, 102, 105, 108, 111, 117, 120, 123, 126–8, 138, 141, 144, 147, 148, 155, 157–9 United Arab Emirates (UAE), 33, 41, 55 United Kingdom (UK), 3, 16, 33–8, 40, 41, 43, 44, 46, 49, 51, 55–7, 62, 64, 65, 74, 75, 83, 86, 89, 93, 96, 99, 102, 108, 111, 115, 118, 121, 124, 127, 137, 146, 148, 154, 156, 158, 159, 166, 167 United Nations, 12, 39 Development Programme (UNDP), 39 United Nations Educational, Scientific and Cultural Organization (UNESCO), 80 United States, 2, 42, 75, 86, 89, 93, 96, 99, 102, 105, 108, 111, 115, 118, 121, 124, 137, 140, 143, 146, 154, 156 utility model, 11 V value added, 11, 23, 58 additional, 14 creation, 16 economic, 15 various returns to scale, 71, 74, 170 Venezuela, 59, 60, 62, 64, 83, 86, 89, 93, 96, 99, 102, 105, 108, 111, 116, 119, 122, 125, 127, 137, 140, 143, 146, 148, 155, 156, 158, 160 Vietnam, 27, 34–40, 44, 46, 56, 57, 60, 62, 64, 65, 83, 86, 89, 93, 96, 99, 102, 105, 108, 111, 117, 120, 123, 126, 127, 138, 141, 144, 147, 148, 153, 155, 157, 160, 161, 168 W weightless economy, 11 World Bank (WB), 1, 12, 13, 22, 66, 80, 81, 127 World Economic Forum (WEF), 45, 46, 54–6, 60 World Intellectual Property Organization (WIPO), 63, 78, 80, 81 .. .National Innovation Efficiency During the Global Crisis Emine Nur Gunay • Gozde Nur Kazazoglu National Innovation Efficiency During the Global Crisis A Cross- Country Analysis Emine Nur Gunay. .. Bibliography 66 4 National Innovation Efficiency During the Global Financial Crisis Period and Afterwards 69 Advantages and Disadvantages of the DEA Model 73 Methodology and Data 78 Empirical... my capabilities and has been an amazing friend for years; My grandfather, Dr Serif Kazazoglu, and my uncle, Prof Ali Rıza Kazazoglu, who always have been my role models in my education and career