The dynamics of national innovation systems: A panel cointegration analysis of the coevolution between innovative capability and absorptive capacity

This paper investigates the idea that the dynamics of national innovation systems is driven by the coevolution of two main dimensions: innovative capability and absorptive capacity. The empirical analysis employs a broad set of indicators measuring national innovative capabilities and absorptive capacity for a panel of 87 countries in the period 1980–2007, and makes use of panel cointegration analysis to investigate long-run relationships and coevolution patterns among these variables. The results indicate that the dynamics of national systems of innovation is driven by the coevolution of three innovative capability variables (innovative input, scientific output and technological output), on the one hand, and three absorptive capacity factors (infrastructures, international trade and human capital), on the other. This general result does however differ and take specific patterns in national systems characterized by different levels of development.

► Novelty: An empirical study explicitly adopting a time series perspective to analyze the evolution of national systems of innovation.
► Idea: The dynamics of national innovation systems is driven by the coevolution of innovative capability and absorptive capacity.
► Data: A new freely available panel dataset (CANA) covering nine different dimensions for 87 countries in the period 1980–2008.
► Method: Panel cointegration analysis: vector error correction model (VECM) and Granger causality analysis.
► Results: NIS dynamics is driven by the coevolution of innovative capability and absorptive capacity, and it differs across national systems.