An empirical study on industrial upgrading and sourcing of new technologies: Firm-level evidences in Indonesia, Thailand and Viet Nam

This paper analyzes bottlenecks that have discouraged firms from being innovative and their magnitudes. We estimate a number of statistical models of the effects of firm-level perceptions of business environments on decision-making on innovation, namely introduction of new goods, adoption of a new production method, and acquisition of a new source of supply. While local business conditions affect innovation activities, there is non-negligible heterogeneity as well. For these analyses, we develop ldquoD-score,rdquo which is a difference between degrees of importance and satisfaction. This indicator of policy demands from firms introduced in the models as independent variables allows deriving practical policy recommendations. We used a sample constructed by mail surveys to firms in Indonesia, Thailand and Viet Nam in October 2007.