Drivers of national innovation in transition: Evidence from an eastern European panel

Innovation plays a crucial role in determining today's economic growth patterns. But whatenables some countries to innovate more than others? This study attempts to answer this questionby analyzing in premiere a panel of sixteen Eastern European transition countries. It provides adetailed description of innovation by identifying regional differences in terms of historicalheritage, technological specialization, commitments and main actors involved in this process,before and after the fall of communism. Secondly, it explores empirically the main drivers oftheir innovative output, proxied by patents, using a variety of econometric techniques. The resultsconfirm the importance of R&D commitments from both public and private sources, the crucialrole of universities and existing national knowledge base. Policy measures such as intellectualproperty rights protection or the business climate impact significantly the propensity to patent,while measures of transitional downturn and industrial restructuring have an important negativeeffect. Finally, globalization contributes to developing new innovations via inflows of foreigninvestment and trade.