Innovation activities in developing countries: the case of Bangladesh and Malaysia
摘要
Innovation is crucial for a country’s economic growth and development. It stimulates productivity and enhances the competitiveness of firms, universities, and other research institutions. Research and development (R&D) investments are one of the most significant inputs to a firm’s ability to innovate. Studies of firms in developed countries have validated the R&D-to-innovation relationship; however, there remains a void in the literature of studies focusing on the R&D-to-innovation relationship in developing countries. This paper explores the effect of R&D investments in firms in two developing countries: Bangladesh and Malaysia. We estimate the marginal effect of R&D on the likelihood of a firm being innovative in each country and find that R&D affects Bangladeshi firms’ innovative behavior more than Malaysian firms. This finding is consistent with the law of diminishing marginal returns and the theory of economic convergence. The paper concludes with some policy suggestions for Bangladesh’s public sector as the country seeks to be more innovative.