INNOVATIONS AND R-AND-D IN NORTHERN-IRELAND MANUFACTURING - A SCHUMPETERIAN APPROACH

Given the importance of R&D and innovative outputs, and the change in regional policy in the 1980s to encourage an enterprise culture based inter alia on a high rate of innovations, this paper attempts to explain the determinants of inventive activities in one of the most disadvantaged regions of the United Kingdom. A model incorporating the impact of market structure is estimated and it is found that, in Northern Ireland, higher R&D spending leads to a higher probability of innovating, while R&D itself is positively affected by higher post-innovation price-cost margins. Thus, R&D spending and innovation outputs are beneficial to profitability and thus presumably the long-term growth of firms. However, while market structure is important, the direct effects of monopoly power are, if anything, negative. Thus, the results presented by GEROSKI, 1990, are supported.