The Challenge of Productivity-Based Development: Innovation Gaps and Economic Structure in Latin America.

In this paper, we analyze how firm-level capabilities and characteristics affect firm innovation activities and innovation outputs in seven Latin American countries in 2016. We include eight innovation activities in accordance with OECD/Eurostat. Using data from the World Bank Enterprise Surveys for manufacturing and services, we distinguish two steps in the innovation process: firm engagement with innovation inputs and the translation of innovation inputs into innovation outputs. The empirical results demonstrate the importance of considering the broad spectrum of innovation activities rather than only focusing on R&D for the production of innovation outputs. The estimates underscore the significance of the impact of economic structure (firm size and sector) on innovation focusing at the micro level. They also suggest a role for government policies in reducing innovation gaps. [ABSTRACT FROM AUTHOR]