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Technology adoption and the investment climate : firm-level evidence for Eastern Europe and Central Asia

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  • Correa, Paulo G.
  • Fernandes, Ana M.
  • Uregian, Chris J.
Abstract
The international diffusion of technology presents an opportunity for developing economies distant from the world technological frontier to reduce their income gap relative to advanced economies. It is therefore crucial to understand why, when faced with similar technological alternatives different firms in different countries choose to adopt different vintages of capital. This paper examines technology adoption across firms in Eastern Europe and Central Asia. The findings show that access to complementary inputs - managerial capacity, skilled labor, finance, and good infrastructure - and to international knowledge - through foreign direct investment or exports - is an important correlate of technology adoption. The link between market incentives and technology adoption is more nuanced. Although consumer pressure results in technology adoption, competitor pressure does not, suggesting that only firms with rents are able to adopt technology given substantial resource constraints. Privatized firms exhibit better technology adoption outcomes but only when a clear private owner with a profit incentive is present. Better governance is associated with technology adoption only in the countries that joined the European Union in 2004. Future increases in technology adoption by firms in the region will require complementary reforms of the investment climate.

Suggested Citation

  • Correa, Paulo G. & Fernandes, Ana M. & Uregian, Chris J., 2008. "Technology adoption and the investment climate : firm-level evidence for Eastern Europe and Central Asia," Policy Research Working Paper Series 4707, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4707
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    Cited by:

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    2. Klaus S. Friesenbichler, 2020. "Does EU-accession affect domestic market structures and firm level productivity?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(2), pages 343-364, May.
    3. Mohamed Chaffai & Patrick Plane, 2017. "Firm Productivity, Technology and Export Status, What Can We Learn from Egyptian Industries?," Working Papers 1134, Economic Research Forum, revised 09 Jun 2017.
    4. Zoo, Hanah & de Vries, Henk J. & Lee, Heejin, 2017. "Interplay of innovation and standardization: Exploring the relevance in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 118(C), pages 334-348.
    5. Herzfeld, Thomas & Drescher, Larissa S. & Grebitus, Carola, 2011. "Cross-national adoption of private food quality standards," Food Policy, Elsevier, vol. 36(3), pages 401-411, June.
    6. Crinò, Rosario, 2012. "Imported inputs and skill upgrading," Labour Economics, Elsevier, vol. 19(6), pages 957-969.
    7. Schiff, Maurice & Wang, Yanling, 2017. "North-South Trade, Technology Diffusion and Productivity Growth: Are Small States Different?," GLO Discussion Paper Series 79, Global Labor Organization (GLO).
    8. World Bank, 2011. "Russia : Reshaping Economic Geography," World Bank Publications - Reports 13052, The World Bank Group.
    9. Mughal, Mazhar & Diawara, Barassou, 2011. "Human capital and the adoption of information and communications technologies: Evidence from investment climate survey of Pakistan," Economics Discussion Papers 2011-21, Kiel Institute for the World Economy (IfW Kiel).
    10. Xu, Jian & Liu, Yu & Abdoh, Hussein, 2022. "Foreign ownership and productivity," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 624-642.
    11. Schiff, Maurice & Wang, Yanling, 2017. "Trade, Education, Governance and Distance: Impact on Technology Diffusion and Productivity Growth in Asia and LAC," GLO Discussion Paper Series 72, Global Labor Organization (GLO).
    12. Fritsch, Ursula & Görg, Holger, 2013. "Outsourcing, offshoring and innovation: Evidence from firmlevel data for emerging economies," Kiel Working Papers 1861, Kiel Institute for the World Economy (IfW Kiel).
    13. Juan A. Martínez-Román & Isidoro Romero, 2017. "Determinants of innovativeness in SMEs: disentangling core innovation and technology adoption capabilities," Review of Managerial Science, Springer, vol. 11(3), pages 543-569, July.
    14. Mohamed Kossaï & Maria Luiza Lapa Souza & Younes Ben Zaied & Pascal Nguyen, 2020. "Determinants of the Adoption of Information and Communication Technologies (ICTs): the Case of Tunisian Electrical and Electronics Sector," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(3), pages 845-864, September.
    15. Ursula Fritsch & Holger Görg, 2015. "Outsourcing, Importing and Innovation: Evidence from Firm-level Data for Emerging Economies," Review of International Economics, Wiley Blackwell, vol. 23(4), pages 687-714, September.
    16. Suh, Joong hae, 2015. "Adoption of Foreign Technologies in Korean Manufacturing Firms: Characteristics and Microfoundations," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 37(3), pages 75-106.
    17. Radu Herman & Cornelia Nistor & Nicolae Marius Jula, 2023. "The Influence of the Increase in Energy Prices on the Profitability of Companies in the European Union," Sustainability, MDPI, vol. 15(21), pages 1-16, October.
    18. Anderson John E. & Toshmatova Muazzam, 2024. "Infrastructure System Obstacles and Technology Adoption by Firms in Transition Countries," Comparative Southeast European Studies, De Gruyter, vol. 72(1), pages 104-134, March.
    19. Abderazak Bakhouche, 2022. "Assessing the Innovation-finance Nexus for SMEs: Evidence from the Arab Region (MENA)," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 1875-1895, September.
    20. repec:lic:licosd:33113 is not listed on IDEAS
    21. Maurice Schiff & Yanling Wang, 2013. "North--South Trade-related Technology Diffusion and Productivity Growth: Are Small States Different?," International Economic Journal, Taylor & Francis Journals, vol. 27(3), pages 399-414, September.
    22. Foster-McGregor, Neil & Kaulich, Florian & Stehrer, Robert, 2015. "Global Value Chains in Africa," MERIT Working Papers 2015-024, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    23. Martínez-Román, Juan A. & Gamero, Javier & Tamayo, Juan A. & Delgado-González, Loreto, 2020. "Empirical analysis of organizational archetypes based on generation and adoption of knowledge and technologies," Technovation, Elsevier, vol. 96.

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