LAUSR

This paper investigates the innovation capacity driving factors in 11 Euro-Mediterranean countries for the period 2000–2012. The countries are chosen according to its capacity for innovation index and the availability of statistics. Our robust estimation is based on the one-step system generalized method of moments (GMM). We found that the most of hypothesis elaborated in the context of developed and emerging countries do not fit with the context of the less innovative countries as they are not knowledge-based economies. The economic growth, the foreign investment (FDI), and the employment in R&D are positive factors that foster the innovation. However, the labor force with tertiary education, the wages, the private funding of R&D, the financial development, and the technological infrastructure are negative factors that deter the innovation. Moreover, this study bridges a gap in the extant literature by examining the main determinants of the innovation capacity in the developing countries located in the same region. Neither this sample of the countries nor this time period has been the subject of investigation by other researchers in the literature.