The impact of institutional quality on regional innovation performance of EU countries

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Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
One of the key attributes of a competitive economy is the ability to innovate. This ability depends not only on technological progress and capital, but also on the environment in which innovations are implemented. There are significant differences in national economic performance among states and there exist even bigger differences at the regional levels. The differences are influenced by innovation potential or more precisely by innovation performance of individual nations or regions which are evaluated within the EU through regular reports of the European Innovation Newsletter. Activities leading to innovations are costly and very risky. Companies are therefore looking for stable environment for their activities. Stable environment can be provided by quality institutions, which includes: conditions for starting a business (so-called start-up), clear and transparent rules when dealing with public administration, investor protection, tax burden, low corruption, competence of public administration and its integrity, equal access to information etc. Nevertheless, the main stream economy ignores more or less the influence of institutions and abstracts transaction costs, thus getting trapped when it is unable to explain why traditional instruments and approaches of neoclassic economy in development schemes often do not contribute to sustainable development. An analysis of selected institutional quality indexes – Doing Business and Corruption Perception Index – and the regional innovation performance index – Summary Innovation index – showed significant effect of these indexes on the innovation performance of countries and therefore regions.
innovation, institutional quality, doing business, corruption