Abstract

Abstract This paper puts forward 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 appears to be driven by the coevolution of three innovative capability variables (technological output, scientific output, innovative input), on the one hand, and three absorptive capacity factors (income per capita, infrastructures and international trade), on the other. Keywords: national systems of innovation; innovative capability; absorptive capacity; economic growth and development; coevolution; panel cointegration analysis. Introduction The study of national innovation systems (NIS) has attracted considerable attention in the last two decades This is unfortunate, since evolution and change represent indeed key aspects of Schumpeterian research, which did in fact constitute some of the crucial motivations for the original development of the NIS approach. The lack of focus on dynamic aspects is partly explained by the lack of time series data of the variables of interest for a sufficiently long period of time, and partly by the analytical and methodological difficulties that are faced when it comes to model and empirically analyse the dynamics of complex evolving systems Most of the empirical literature on innovation and growth, though, is yet to study two important issues. First, a substantial amount of research has been devoted to the analysis of the impacts of innovation on economic growth while the investigation of the determinants and drivers of national innovative activities, has so far received only limited attention This paper adopts a time series perspective and shifts the focus to the analysis of the drivers of NIS over time, putting forward the idea that innovative capability and absorptive capacity are linked by a set of two-way dynamic relationships, and that their process of coevolution represents a key mechanism driving the growth of national systems in the long-run. Literature review National innovation systems are key drivers of economic growth and the competitiveness of countries. The study of NIS focuses on the main components of the system and investigates their mutual interactions as well as their relationships with the social and institutional framework in which the system is embedded The study of the dynamics and evolution of national systems provided one of the original motivations for the development of this approach. However, the focus on long-run dynamics