Innovative activity in the Caribbean: Drivers, benefits, and obstacles

Abstract

The objective of this chapter is twofold: to investigate the impact of innovation on the productivity of Caribbean firms and to establish the determinants of such innovation. To this end, a rich firm-level dataset covering 14 different Caribbean countries is used, and various non-parametric, semi-parametric, and parametric statistical tools are applied to models using the data. The results provide evidence that, while firms may be productive for many reasons, there are substantial productivity benefits to be derived from investment in innovation. Moreover, these benefits do not appear to differ significantly from those that prevail in Latin American and other developing countries. However, there is some indication that factors that would normally encourage innovation investment, such as patent protection, public subsidies, or cooperation among innovators, may not bear fruit in the Caribbean.