Economic Regime and Innovative Entrepreneurship Potential in Global Perspective: Suppression Index

Antoni Z. Kaminski and Bartłomiej Kaminski
WSIiZ Working Papers
No 12.
This paper uses data collected in the World Bank’s ‘Knowledge for Development’ database to develop an index providing a quick assessment of the extent to which the economic regime undercuts the utilization of a country’s potential in terms of the quality of human capital, attained level of development of information and communication technologies together with the attained level of density of networks critical to stimulating and disseminating knowledge with practical applications. The international rankings or more exactly of scores that national economies get for attained level in each of these three pillars sheds light on the economy’s relative potential that can be tapped provided there are no serious constraints to entrepreneurial activity imposed by the economic regime. The suppression of a country’s potential for ‘creative destruction’ takes place if the score assessing country’s innovative and entrepreneurial potential exceeds that of an economic regime. The proposed index of suppression is the ratio of the difference between scores for potential and economic regime’s scores to their sum. It measures the extent to which the economic regime does not allow for capitalizing on its knowledge potential. Calculations of suppression indices for 140 countries represented in the database for years 1995, 2000 and 2012 have produced no surprises. Failed states and authoritarian regimes were among those with economic regimes suppressing accumulated potential: their economic systems fail to capitalize on their knowledge potential. The implementation of this analysis to former centrally planned economies also demonstrated the usefulness of the “suppression analysis” for tracing progress in transitioning towards economic regimes encouraging private sector development and innovativeness.
Keywords: globalization, knowledge intensity; comparative economic systems; transition from central planning; economic incentives; diffusion of technology
JEL classification: F01; F60; F63 ; L50
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