PERFORMANCE OF NATIONAL INNOVATION SYSTEMS DURING THE GLOBAL CRISIS: A CROSS-COUNTRY ANALYSIS

The Global Financial Crisis of 2007-2009, followed by the Euro Crisis, changed the world economic and social balances. By turning upside down the letter-perfect and internalized global economic and social judgments and expectations, the Global Financial Crisis gave birth to a new world order and to a 'new normal'. Since the internal dynamics of the firms, sectors, countries and regions differ highly, the effect of the global crisis to firms, sectors, countries and regions in terms of intensity of the shock and the recovery process was also uneven. This new normal, together with the technological development, increased the importance of the innovation and efficient use of scarce resources to avoid deadlock in the inclusive and sustainable growth. Thus, the aim of this study is to focus on the innovation efficiency of the countries to see the effect of the global crisis on the capabilities of the countries. In this study, two alternative models with two different approaches of Data Envelopment Analysis (DEA) under two different specifications (input-oriented and output-oriented) are utilized to trace innovation performance across 56 countries during the global crisis from 2007 to 2012. The empirical evidence reveals that the negative effects of 2008 crisis are reflected on innovation efficiencies of countries in 2008 in the base model and 2009 in the lag model. In addition, grouping countries according to their GDP and GDP per capita and implementing two different models show that there could be difference in the innovation efficiency results since the DEA model shows the innovation efficiency in comparison with the other countries' efficiency. Lastly, with the data it is observed that higher GDP or higher GDP per capita do not lead to high innovation efficiency.