Macroeconomic Conditions, Innovation and Competitiveness

The main concern of policy makers in developed and developing countries today is national competitiveness and how competitiveness can be improved. Our contribution examines the possible impact of key macroeconomic factors on competitiveness at the national level and aims to demonstrate how competitiveness in emerging economies are differentially driven by the interplay between innovation activities and macroeconomic factors. Our empirical analysis is based on the general method of moment (GMM) panel data covering 12 years (2007–2018) and 16 emerging countries. The main findings are obtained as (i) there exists an unconditional positive impact of innovative activities on competitiveness; (ii) the conditional effect of macroeconomic factors increases competitiveness; and (iii) the net effects on competitiveness from the interactions of innovation with the macroeconomic indicators are positive, indicating that the macroeconomic stability can be employed to enhance the positive effect of innovation on competitiveness.