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Assessing the Drivers of R&D Activities of Firms in Developing Countries: Evidence From Turkey

Research and development (R&D) activities of firms in developing countries (DCs) have been gaining in importance for nationwide economic growth and development, while globalization of the world economy offers a number of opportunities for fostering knowledge-creating activities. Therefore, a better understanding of factors influencing R&D activities of firms in DCs with a view to conceive and implement appropriate policies is firmly on the agenda. In this article, a rich firm-level data set and a new estimation methodology with selection and endogeneity correction are used over the period 2003-2007 to investigate drivers of manufacturing R&D in Turkey. Our results indicate positive effects of foreign direct investment (FDI)-related vertical R&D spillovers, R&D subsidies and distance to technology frontier on R&D intensity, whereas FDI-related horizontal R&D spillovers, firm size and export intensity exert a negative effect.