Complementarities in Innovation Policy

35 Pages Posted: 26 Mar 2001

See all articles by Pierre Mohnen

Pierre Mohnen

Maastricht University - UNU-MERIT

Lars-Hendrik Röller

ESMT European School of Management and Technology; Centre for Economic Policy Research (CEPR); WZB Berlin Social Science Center - Competitiveness and Industrial Change

Date Written: February 2001

Abstract

This Paper develops a framework for testing discrete complementarities in innovation policy using European data on obstacles to innovation. We propose a discrete test of supermodularity in innovation policy leading to a number of inequality constraints. We apply our test to two types of innovation decisions: to innovate or not, and if so, by how much. We find that industries display a considerable amount of complementarity, with some industries being complementary across all obstacles. We also find that the lack of internal human capital (skilled personnel) is complementary to all the other obstacles in almost all industries. In this sense, our results suggest that internal human capital is key to any innovation policy, insofar that it is complementary to all the other factors that might hamper innovation activities.

Keywords: Complementarity, innovation, supermodularity

JEL Classification: L5, O31, O38

Suggested Citation

Mohnen, Pierre and Röller, Lars-Hendrik, Complementarities in Innovation Policy (February 2001). Available at SSRN: https://ssrn.com/abstract=264367

Pierre Mohnen (Contact Author)

Maastricht University - UNU-MERIT ( email )

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Netherlands
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Lars-Hendrik Röller

ESMT European School of Management and Technology ( email )

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Berlin, 10178
Germany

HOME PAGE: http://www.esmt.org/eng/faculty-research/lars-hendrik-roeller/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

WZB Berlin Social Science Center - Competitiveness and Industrial Change ( email )

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10785 Berlin
Germany
+49 30 2549 1440 (Phone)
+49 30 2549 1442 (Fax)

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