Business Commons^™

Innovation Dynamics And Financial Stability: A European Union Perspective, Francisco Javier Santos-Arteaga, Madjid Tavana, Celia Torrecillas, Debora Di Caprio

Business Systems and Analytics Faculty Work

We present a formal and empirical framework that links the technological capacity of a country, reflected in its National System of Innovation, with the financial constraints it faces. The paper is divided into two sections. The first one introduces a stochastic growth model based on the relative level of technological development of countries, which determines their productivity and capacity to finance innovation activities. The second section describes the empirical conditioning observed in the innovation outputs of countries determined by their financial constraints and time period relative to the economic crisis of 2008. We classify a panel sample of European Union …