A Comparative Analysis of National Innovation Performance: The Baltic States in the EU Context

University of Tartu Faculty of Economics and Business Administration Working Paper No. 78

56 Pages Posted: 10 Dec 2010

See all articles by Tiiu Paas

Tiiu Paas

University of Tartu - Faculty of Economics and Business Administration

Helen Poltimäe

University of Tartu - Department of Economics

Date Written: December 9, 2010

Abstract

This paper bridges two approaches to assess national innovation performance based on European Innovation Scoreboard (EIS) composite indicators and the analysis of the factors that may be behind these indicators. The main focus of the study is on analysing the innovation performance of the Baltic States – small countries with similar post-socialist path dependence. Our aim is to explore what factors have been most influential in developing the different levels of innovation performance in these countries, and whether these differences are also captured by innovation measurement indicators. Our analysis shows that the inability to sufficiently capture the quality of human capital, the small economy effect (i.e. high dependence on single enterprises in a sector) and data availability issues represent remarkable measurement problems. The measurement results may also be biased as a result of self-reporting indicators. This conclusion was confirmed by comparing the EIS evaluations with the results of our assessment via factor analysis. The results are robust. Estonian innovation performance seems to be ahead of the other two Baltic countries; the main causes have been the successful attraction of foreign investment, favourable tax policy and possible positive spillover effects from the Nordic neighbourhood, particularly Finland and Sweden.

Keywords: National Innovation Performance, Innovation Measurement Problems, Composite Indicators, The Baltic States

JEL Classification: O3, O1, C8, I2

Suggested Citation

Paas, Tiiu and Poltimäe, Helen, A Comparative Analysis of National Innovation Performance: The Baltic States in the EU Context (December 9, 2010). University of Tartu Faculty of Economics and Business Administration Working Paper No. 78, Available at SSRN: https://ssrn.com/abstract=1722717 or http://dx.doi.org/10.2139/ssrn.1722717

Tiiu Paas (Contact Author)

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A214
Tartu 51009, 51009
Estonia

Helen Poltimäe

University of Tartu - Department of Economics ( email )

Narva 4-A123
Tartu, 51009
Estonia

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