Foreign Competition and Innovation in Latin America

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Peer Reviewed icon Peer Reviewed
Date issued
Dec 2019
Subject
Innovation;
Competitiveness;
Foreign Direct Investment
JEL code
O32 - Management of Technological Innovation and R&D;
F61 - Microeconomic Impacts
Category
Discussion Papers
Using microlevel data for several Latin American countries, we provide novel evidence on the relationship between foreign competition and innovation. We find that greater foreign competition has a positive impact on diverse indicators of technological innovation. We are unable to find an inverted-U relationship, indicating that for these countries there is room to increase innovation through strengthening competition in product markets.