Northern and southern innovativity: A comparison across European and Latin American countries

This paper compares the role of innovation and economic performance across European and Latin American countries, using firm-level data from France, Spain, Switzerland, Argentina, Brazil and Mexico. We implement a standard structural model linking R&D intensity, innovation and productivity. We find evidence revealing structural differences between Europe and Latin America, but also the presence of heterogeneity within each. In particular, firms tend to engage in innovation activities in order to achieve better economic performance on a similar basis among countries, but their interaction with national systems is weaker in developing countries. The fact of being a foreign subsidiary of a foreign multinational is found to have a heterogeneous effect on innovativity, whereas it leads to increased productivity in every country.