Complementarity Between Human Capital and Research and Development Activities

National Innovation System (NIS) approach specifically focuses on the interactions among the components of system as a basic dynamic of innovation process. Thus, there is a complementarity between the components of system arising from interactions among them, which is the most significant factor effecting innovation performance of whole system. The aim of this study is to examine the complementarity between Human Capital and Research and Development (R&D) activities as the basic components of NIS. Using Canonical Correlation Analysis method, we calculate the interactions among the set of variables related to Human Capital and R&D activities within the European countries. Empirical findings indicate that there is a significant interaction between components of Human Capital and R&D. As argued by NIS approach, these two dimensions are linked together by a set of two-way dynamic relationships. Thus, deeper understanding of the impact of R&D on innovation performance needs combined analysis getting R&D and Human Capital together. The most important policy implication of the results is that policies focusing to enhance only one component of system is not enough to improve innovation performance since there is a complementarity among components of NIS. For example, innovation policies like European Union aiming to increase R&D-to-GDP ratio to certain level is not enough without systemic design of other factors related to Human Capital.

Author Information
Özcan Karahan, Bandirma Onyedi Eylul University, Turkey

Paper Information
Conference: ECSS2016
Stream: Economics and Management

This paper is part of the ECSS2016 Conference Proceedings (View)
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