Innovation Conversion Under Global Shocks: Asymmetric Adjustment and Resilience Across Countries

This study examines how global shocks shape the ability of national innovation systems to convert innovation inputs into measurable outputs. Using an unbalanced panel of 150 economies and 1735 economy-year observations from the Global Innovation Index over 2013–2025, we construct Innovation Conversion Performance (ICP) as the residual from a two-way fixed-effects benchmark relating innovation output to innovation inputs. ICP reflects conversion performance rather than resilience itself; resilience is assessed through ICP’s dynamic response to three global shocks, pandemic uncertainty, geoeconomic fragmentation, and economic uncertainty, interacted with country exposure ranks and decomposed into escalation and normalization phases. The empirical strategy combines calendar-safe lags; economy and year fixed effects; economy-clustered and Driscoll–Kraay inference; exposure-specific trends; and distributed-lag, prior-escalation, placebo, and pre-trend diagnostics. The most robust finding concerns pandemic normalization: ICP remains depressed as pandemic pressure recedes, with a significant negative cumulative effect over horizons h = 0 to h = 2, whereas escalation is not significant; the pre-pandemic trend and placebo tests show no anticipatory differentials. The evidence for economic uncertainty is weaker, suggesting short-run adjustment followed by partial recovery, while the fragmentation effects remain exploratory and imprecise. The findings are consistent with delayed post-shock adjustment, not symmetric recovery, but do not by themselves establish hysteresis.