Does innovation really enhance national competitiveness in developing countries? Evidence from Asia

Enhancing national competitiveness is an important policy for supporting economies in the context of globalization. Although some emprirical studies done in developed countries, the link between innovation and national competitiveness in developing coutries has not received enough academic attention yet. Therefore, this study aims to investigate the impact of innovation on national competitiveness in Asia. We use the Generalized Double Diamond (GDD) approach to establish the theoretical framework of the study. The panel data estimations including Pooled OLS, Fixed effects, Random effects, and Driscoll-Kraay standard error are employed to calculate the effects of innovation on national competitiveness with a datasets covering 21 developing economies in Asia from 2011 to 2022. The results confirm that innovation positively affects the competitiveness of developing countries. All domestic elements including tax, infrastructure, and institutional have positive effects on national competitiveness. Export helps increase national competitiveness but foreign direct investment can harm the competition level of countries. This research may be the first one to analyze the impact of innovation on the competitiveness of countries. The results provide valuable information for policymakers to handle innovation like the coding strategy for enhancing national competitiveness in the future. Besides, governments should assess their competitive position and identify critical technology areas for improvement in national competitiveness.