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A measure of technological capabilities for

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ARTICLE in TECHNOLOGICAL FORECASTING AND SOCIAL CHANGE SEPTEMBER 2014
Impact Factor: 1.71 DOI: 10.1016/j.techfore.2014.09.003

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Technological Forecasting & Social Change 92 (2015) 210223

Contents lists available at ScienceDirect

Technological Forecasting & Social Change

A measure of technological capabilities for developing countries

Nabaz T. Khayyat , Jeong-Dong Lee
Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University, San 56-1, Sillim-Dong, Kwanak-Gu, 151-742 Seoul, South Korea

a r t i c l e

i n f o

Article history:
Received 7 December 2013
Received in revised form 6 August 2014
Accepted 10 September 2014
Available online 26 September 2014
JEL classification:
C19
C49
I32
J24
O30
O32
Keywords:
Innovation index
Technological capabilities
Innovation diffusion
Human skills
Socio-economic indicators

a b s t r a c t
The study was conducted to develop an index as a new measurement tool analyzing the
innovativeness of developing countries. The role of science and technology in enhancing the
rate of innovation is also investigated. The index is estimated for 61 countries observed
during 20032008. The countries are classified into three groups based on their innovation
level. The highest rate of innovation was noticed in China, followed by Estonia and Malaysia.
The lowest innovation rate was reported in Iran, Bangladesh, Tadzhikistan, and Cambodia. It
is recommended that governments (1) to allocate significant share of their budgets to the
factors that enhance technological capability such as the science education, gross education
enrollment rate and internet connectivity, (2) to promote policies of national awards for
scientists and researchers who make sound breakthroughs in science and technology, (3) to
develop international relations in the social, economic, cultural, and scientific spheres, (4) to
modify school curriculum and syllabus, so that higher emphasis is given to the creativity and
spontaneity of the children, (5) to relax portion of corporate taxes for developing an
innovative way of product and production processes, which are environmentally friendly
and economically viable. Finally, (6) the special focus must be given to the encouragement of
local organizations to conduct the specialized training programs to promote innovation
activities.
2014 Elsevier Inc. All rights reserved.

1. Introduction
The definition of innovation has evolved over time. In
Drucker (1985) innovation is defined as the specific tool of
entrepreneurs and the means for exploiting the change as an
opportunity for a different business or services. Damanpour
(1991) defines innovation as any practice that is new to
organizations, including equipment, products, services, processes, policies, and projects. More recently, Afuah (2003)

The authors are grateful to anonymous referees and the Editor of the
journal for very useful comments and suggestions on an earlier version of the
manuscript.
Corresponding author. Tel.: +82 2 880 9298; fax: +82 2 873 7229.
E-mail addresses: nabaz@snu.ac.kr (N.T. Khayyat), leejd@snu.ac.kr (J.-D.
Lee).

http://dx.doi.org/10.1016/j.techfore.2014.09.003
0040-1625/ 2014 Elsevier Inc. All rights reserved.

proposed that innovation is the use of new technical and

administrative knowledge to offer a new product or service to
customers. It is a process of coming up with new ideas leading
to higher convenience for human existence. In other words,
innovation is a gradual process of converting the opportunity
into new ideas which will be further employed for development of new practices leading to technological advancement
(Tidd, 2001).
The inter-relationship between science and technology and
innovation is significant. They both positively influence each
other. The existing literature suggested that the rate of
innovation and contribution from science and technology has
not been satisfactory in several developing countries in Asia,
Middle East, South America, and Africa (Almeida and
Fernandes, 2008; Archibugi and Coco, 2004; Fagerberg and
Verspagen, 2007). Though some types of methodologies were
used for measuring the extent of innovation in few studies,
they lack the clarity in identifying the extent of innovation in

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

developing countries and their relative status with that of

developed countries. Moreover, the role of developing
science and technology in enhancing the rate of innovation
were not focused specifically in those studies. For example,
the Technology Index developed by the World Economic
Forum (WEF, 2011), and the Technology Achievement
Index (TAI) developed by UN Development Program
(UNDP, 2001) concentrate much on the extent of advancement in technology, rather than creativity and innovation.
Similarly, the UN industrial development scorecard developed by UNIDO (2002) emphasizes more on the rate of
industrial growth which is not fully linked with the rate of
innovation.
All these methods did not take science and technology
development as a major component of measuring the
technology indices. Few studies were concentrated on
measuring science and technology development and growth
rate such as Science and Technology Capacity Index by Rand
Corporation (Wagner et al., 2001). However, its interrelation
with the rate of innovation is yet lacking. Though some
efforts were made by researchers to find better measurement tools relative to that of the above said methods, they
too could not integrate the various factors affecting science
and technology and innovation in an integrated manner.
Hence, there is a necessity for identification and standardization of new means of estimating the extent of contribution made by science and technology for the innovation in
developing countries, and accordingly the policy initiatives
can be taken.
As well described by Archibugi et al. (2009), there are
mainly three benefits to make technological capabilities' based
index measure: First, theoretical analysis which enables the
researchers to test different innovation theories and their
relation as a drive engine to the economic growth, second,
technological capabilities' based index as a source of information will enable policy makers to place their countries in a
position where strength and weaknesses can be identified, and
accordingly appropriate innovation policies may be formulated
and finally, such indices may act as inputs for firms' and
industries' strategies to enable managers to understand the
extent of the technological advance to better develop their
innovation activities.
There is a need for increasing the extent of innovation
through better focus on science and technology and research
to promote and strengthen development in developing
countries. Developing countries should try to match their
rate of development with that of the newly developed
countries such as South Korea. For achieving the same
development, there is a need for identifying the present
rates of innovation and extent of contribution made by the
science and technology towards the process of innovation.
As mentioned earlier, the existing measurement tools lack
some key factors of science and technology, such as average
number of citations per science and education article, and
local availability of specialized training and resources
affecting innovation rate. Hence the formulation of future
strategies for enhancing the innovation rate becomes a
major challenge.
Keeping these points in view, the present study has been
conducted to answer questions such as what is the most
efficient way of measuring innovation rate and technological

211

capabilities in developing countries? and whether there is a

scope for further development of an integrated innovation
index that measures the rate of innovation more accurately
than the existing methods. The present study develops a new
measurement tool of innovation called a technological
capability index (TC-index) which is multidimensional and
more effectively accounts for the factors underlying innovation and technological capability of developing countries,
than the existing methods. Based on the identified factors
affecting innovation rate derived from TC-index, future
management strategies have been suggested for the achieving a higher growth rate of science and technology and
innovation in developing countries. The TC-index through
its better coverage of underlying development is superior to
the existing indices, and as such it makes a contribution to
the literature.
The rest of this study is organized as follows. Section 2 is a
review of the literature on factors affecting the rate of
innovation and existing measurement methods. The theoretical framework and methodology in the design of the
proposed TC-index is outlined in Section 3. Empirical results
and its discussion accounting for country group heterogeneity found in Section 4. Section 5 concludes and provides
policy recommendations.

2. The review of literature

2.1. Factors affecting the rate of innovation
The existing literature on technology and innovation
indices used in assessing development is relatively new and
developing but yet with major limitations. A number of
factors are identified to affect the rate of innovation at both
micro- and macro-levels. These include firms' innovation
ability and capacity, industry level collective capability and
networks, innovation friendly environment, global economic system and trade related intellectual property rights
protection, state support in interacting learning and
technological capability, multinational corporation role in
organizational and geographical mobility of innovation,
indigenization of learning capability, global and regional
innovation networks and systems, and coordination between public and private agencies.
The ability to innovate is generally accepted as a critical
success factor to growth and future performance of firms.
Carayannis and Provance (2008) investigated how firms
can influence their innovation capacity. The author proposed a 3P construct of innovation measurement at the
micro-level, Posture, Propensity and Performance related
to a firm's innovation capabilities. Schmitz and Strambach
(2009) revealed that there exists a fundamental change in
the process of innovation in developed countries. They
found that the origin of innovation has been changed from
centralized system to decentralized mode. It was also
found that the organizational decomposition of the innovation process changes the global distribution of innovation
of activities, which may also influence innovation in the
developing world. Iizuka (2009) by correlating the knowledge creation and innovation, suggested that today global
environment requires different types of knowledge and

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N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

innovative capabilities from the side of the developing

countries.
Results based on firm level data across 43 developing
countries in studying the importance of the innovation system
in developing small economies, revealed that export and
import activities are important channels for the transfer of
technology and utilization of scale in innovation (Almeida and
Fernandes, 2008; Fagerberg and Verspagen, 2007). The international agreement has also affected the level of innovation
and science and technology in developing countries such as
India (Dutta and Sharma, 2008). They found that India's signing
the TRIPs (Trade Related Intellectual Property Rights) agreement in 1994 affected the Indian firms' growth rate in their
product innovation and science and technology, in particular
among the more innovation intensive industrial firms.
Komninos and Tsamis (2008) investigated the Greek innovation system and identified important asymmetries prevalent in
the system, which explains the low performance of the Greek
innovation system. Oyelaran-Oyeyinka and Gehl Sampath
(2009) analyzed the main institutional mechanisms that foster
the emergence and performance of firms in knowledge
intensive sectors in South Africa and Malaysia. They illustrated
the linkages between interactive learning and technological
capabilities, and how state support plays a critical role in
enabling these linkages. The development of technological
capability has been analyzed by Quadros and Consoni (2009) in
the Brazilian subsidiaries of multinational vehicle assemblers.
These played a role in building up local technological
capabilities in product development in Brazil. Ernst (2008)
explained how innovation off-shoring gives rise to Global
Innovation Networks (GINs) in the field of electronics industry.
They explained about the forces that are responsible for the
organizational and geographical mobility of innovation within
GINs emphasizing their systemic nature.
In a recent article, Ayyagari et al. (2012) studied the
firms' innovation practice in 47 developing countries. They
extended the definition of innovation to include decision
sources that have impacts on the firms' organizational
activities and firms' dynamism, and other types of activities
that promote knowledge transfer. These include joint
ventures and obtain new licensing agreements. From
investigating the type and the extent of innovation
intensity of firms, Egbetokun et al. (2012) found that the
effects of organizational innovation are higher than
diffusion-based innovation in developing countries. They
concluded that firms in developing countries are not
innovation-inactive. They may do better if firms are well
organized and make higher investments in learning and
capacity building.
Some researchers emphasized the link between the
innovation strategies and promotion of science and technology and industrial development. Clark et al. (2008)
stressed on the necessity to reduce the barriers of innovation
in public sector, and to encourage the drivers of the
innovation in public sector in developing countries by
developing technological, social, and financial innovations.
In this regard, Kaplinsky (2007) emphasized on the indigenization of learning capabilities to become part of comprehensive
innovation strategy in economic development. The concept of
Regional Innovation System (RIS) developed by Cooke (2008),
and a study by Moreira (2008) suggest strategic lines to

achieve a regional innovation strategy to develop innovative

clusters in Portugal. Felker and Sundaram (2007) reported that
Malaysia has mounted notably comprehensive efforts to build a
national innovation system, and despite efforts to promote
science and technology policies, the challenges remained
affecting successful innovation strategy. They suggested establishment of ordination between public sector technology
agencies and private enterprises.
2.2. A comparison of existing index measures
Several researchers investigated the status of innovation
and technology development. However, few studies were
conducted on the role science and technology played in
enhancing the rate of innovation. They compute indices
which are mainly based on the Human Development Index
(HDI) methods of calculation with different dimensions to
rank countries and to make inference about their state of
science and technology and polices. Archibugi and Coco
(2004) compared several measures of national technological capabilities. A methodology called ArCo was developed
and compared with the methodologies for measuring
innovation and technology development designed by the
World Economic Forum (WEF), The United Nations Development Program (UNDP), the United Nations Industrial
Organization (UNIDO), and the US Research and Development Corporation (RAND). These methodologies to measure
technological capabilities are reported in (Archibugi et al., 2009;
Desai et al., 2002; Felker and Sundaram, 2007; Lall, 2003; Tidd,
2001; U.N., 2008; UNDP, 2001; UNESCO, 2005; UNIDO, 2002;
Wagner et al., 2001).
ArCo was estimated for 162 countries by considering three
dimensions of technology into account, innovative activity
(based on patents registered at US patent office and scientific
publications); technology infrastructure (based on internet,
telephone mainlines and mobile, and electricity consumption);
and human capital (based on scientific tertiary enrolment,
years of schooling, and literacy rate).
The UNDP Technology Achievement Index (TAI) (UNDP,
2001) was estimated for 72 countries and considered four
dimensions of technology achievement: Creation of technology
(based on patents registered and royalty and license fees),
diffusion of newest technologies (based on internet hosts and
medium-and high-technology exports), diffusion of oldest
technologies (based on telephone mainlines and electricity
consumption), and human skills (based on years of schooling
and tertiary science enrolment).
Science and Technology Capacity Index (Wagner et al.,
2001) was developed for 76 countries by RAND Corporation, based on eight indicators, which in turn are aggregated and divided into three categories: Enabling factors
(based on GDP and tertiary science enrolment), resources
(based on R&D expenditure, number of institutions and
scientists and engineers), and embedded knowledge
(based on patents, science and technology publications,
and co-authored papers). A synthetic index is created
through a standardized formula, with different outcomes
occurring according to the weights assigned to the three
index components.
The global competitiveness index developed by WEF
(2001) considered two main measures for competitiveness

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

and economic development, the first devoted to the mediumterm growth and the second to the short-term current
competitiveness index. The growth component was estimated
on the basis of a battery of variables linked to growth grouped
into three components: The level of technology, the quality
of public policies, and the macroeconomic environmental
conditions. The competitiveness index component was
estimated on the basis of variables that concentrate on
microeconomic aspects, such as the business environment
around a firm, and the strategy and organization inside a
company. These were estimated for 75 countries, divided
into two groups, core and non-core, according to the number
of patents produced.
The index by UNIDO (2002) was estimated for 87 countries
considering four categories: Technological effort (based on
patents and enterprise financed R&D), competitive industrial
performance (based on manufactured value added and exports
and medium- and high-technology sectors share), technology
imports (based on foreign direct investment (FDI), foreign
royalties payments, and capital goods), and skills and
infrastructures (based on tertiary technical enrolment and
telephone mainlines).
Few studies suggest improvement of the abovementioned
indices. For instance a conceptual framework for approaching
the promotion of technological innovation and its diffusion is
developed by Aubert (2005). It took into considerations
constraints of innovation climates such as poor business and
governance conditions, low educational levels, and mediocre
infrastructure which affect diffusion of technologies and
related practices. The author suggested strategies for better
innovation rate like provision of the necessary package of
support related to technical, financial, commercial, and legal
aspects, as well as attention to be paid to administrative and
cultural traditions. Dolan et al. (2008) explained the process of
how innovation takes place in the public sector. Two stages in
public sector innovation, i.e. invention-based and diffusionbased are identified. They also examined three key differences
specific to the public sector that strongly affect how government organizations operate in terms of innovations. Crosta and
Lpez (2009) studied the relationship between innovative
approaches and eLearning. They measured innovation in
eLearning projects, focusing on the concept of innovation and
three key aspects, i.e. technological innovation, sociological
innovation, and service customization. Table A.1 in Appendix A
provides a summary of the comparison between the existing
indices.
In sum, though these studies explain several specific factors
that influence the rate of innovation, they lack required
parameters to draw an accurate conclusion on the specific
factors affecting the rate of innovation in developing countries.
Hence, the present study has been initiated to develop most
innovative method of measuring innovation.
3. Theoretical framework and methodology
3.1. Technological innovation and indices
National innovative capacity can be defined as the ability of
a country to produce and commercialize a flow of innovative
technology over the long term. The strength of a nation's
common innovation infrastructure is affected by the national

213

innovative capacity and the internal environment for

innovation in firms. It is found that there exists a close
relation between international patenting and variables
associated with the national innovative capacity framework.
Some internal factors like structures, climates, and cultures
of organizations influence the innovativeness (Kanter, 1988;
Thong, 1999). The management skills, organizational encouragement for innovation, and support in the form of
innovation resources would help the improvement of
innovation (Amabile, 1988). In this regard, Tornatzky and
Fleischer (1990) suggested that an organization with higher
quality (skills) of human resources will have higher abilities
in technological innovation.
According to Berry et al. (2010), the firms' technological
innovation environment can be divided broadly into internal
and external parts. The external environment, in which a firm
is operating will influence the innovative capability (Handoko
et al., 2014). Governmental support is another important
environmental characteristic for technological innovation.
Governments through effective regulation may play different
roles in the adoption of innovation (Damanpour, 1991). According
to Tornatzky and Fleischer (1990) the environments with high
uncertainties have a positive influence on the relationship
between organizational structure and organizational innovation. The patent protection and regulation system and patent
application have positive effects on innovation (Mazzoleni and
Nelson, 1998). In other words, the patent number and
innovation rate are positively correlated. Thus, the patent
number can be considered as one important factor affecting the
rate of innovation in developing countries (Chen and Puttitanun,
2005; Kim et al., 2012).
Innovation activities in domestic economies may benefit
from FDI (Fu et al., 2011). These benefits are through
different spillover channels such as reverse engineering,
skilled labor turnover, demonstration effects, and supplier
customer relationships (Cheung and Lin, 2004). The positive
effect of internet access on the rate of innovation is reported
by Kaufmann et al. (2003). It was found that the internet is a
new information and communication technology (ICT) that
has a big potential to improve the relationships and
networks among various enterprises. ICT will allow firms to
interact with distant partners more easily, and as a consequence, innovation networks get enhanced. Hence, ICT use and
FDI have been considered as important variables affecting the
rate of innovation in this study. Based on the theoretical
considerations regarding the meaning of innovation and various
factors affecting innovation, this study develops a more
integrated approach for developing a new index of innovation,
i.e. TC-index.
The above theoretical considerations suggest that several
internal and external factors affect the rate of innovation in
developing countries. Though the existing methods address
the innovation rate to some extent, there is still a scope to
improve the index which will be more integrated in nature.
Keeping this in view, the present study has been made to
develop a better technology innovation index. The information related to the development of science and technology
and innovation in developing countries under study was
collected through a review of literature from standard
international journals, reference books, and reports. The
literature was studied and analyzed based on the objective

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N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

of the study i.e. identifying the level of contribution made by

the science and technology towards innovation in these
developing countries. The existing measures of innovation
indices were reviewed and their advantages and disadvantages
were assessed.
Based on the pros and cons of existing methods listed above,
the new TC-index was developed which attempts to take into
consideration of all the prioritized factors affecting science
and technology and innovation in an integrated manner.
According to the score obtained by the TC-index, a new
classification for categorizing the countries based on the
present level of resources for science and technology is made
available with them. It is consistent in reflecting the actual
rate of innovation.
3.2. Data and estimation
The strategy for construction and computation of the
proposed TC-index is by utilizing data that contains 28
indicators (see Table A.2. for the indicators and their data
sources) of technology and innovation. The data covers 61
developing countries from different continents, observed
during 20032008.1 The data is obtained mainly from the
World Bank's World Development Indicators and other
international data sources. The sample is limited to developing countries to focus on the technology innovation
capability of these countries as group, and in line with the
objective of this study and limitations of the literature. The
sample is further distinguished by the level of index into
three groups.
The creation of TC-index indicators is based on several
assumptions. The indicators built in this study share the
common ground with others, as discussed by Archibugi et al.
(2009) the international comparisons are meaningful, regardless of the differences in social, cultural, and geographical
contexts. In addition to that, various statistics on technological
capabilities can be aggregated based on the assumption that
each individual indicator is a complimentary rather than a
substitute to each other.
The selection of the indictors is mostly based on the
literature of the systems of innovation. However, this study,
does not integrate the popular cluster theory into account for
many reasons: First, developing countries' lack of statistics on
microeconomic environment variables. Second, cluster development has been treated as the ex-ante idea in developed
countries while ex-post in developing countries. This study
recognizes other group of factors as more relevant to
developing countries' context. For instance, since most of the
advanced technologies adopted by developing countries are
not locally developed, they are imported from developed
countries, hence, technology import should be included in the
models. The FDI, trade liberalization, and consequently the
globalization led to increase in the capital available to
developing countries, which potentially increased their ability
to grow (Golub, 2009). One common character of developing
countries recognized by most authors is domestic technological
1
The current measure of innovation is estimated based on different
indicators of innovativeness that are observed once during the sample period.
In other words, the data is a cross sectional dimension, and the identied
indicators based on data availability are observed at different points of time.

capabilities in these countries (Archibugi et al., 2009). Hence,

the indicator local availability of specialized research and
training services is also included. It is worth mentioning that
the model proposed here does not substantially deviate from
formerly used models to study technological capabilities in
OECD countries (see for example: Furman et al., 2002; Gans and
Hayes, 2006; Morrison et al., 2008; Wennekers, 2006).
The indicators were subjected to a principal component
analysis (PCA) methodology, using ones as prior communality
estimates. The PCA is defined as a mathematical procedure that
helps in transforming a number of correlated variables into a
smaller number of uncorrelated variables known as principal
components (Kaufmann et al., 2003), so that the first few retain
most of the variation present in all of the original variables
(Jolliffe, 2002). The PCA is widely used as a parametric
multivariate indexing to combine several variables into a
smaller set of independent variables without losing the
essential information from the original data (Tausch et al.,
2010).2
The indicators for the rate of innovation are categorized as
six principal components. It is the simplest of the true
Eigenvector based multivariate analyses. It reveals the internal
structure of the data in a way which best explains the variance
in the data. The PCA was applied to extract the components,
and this was followed by a varimax or orthogonal rotation.
Despite the large number of indicators and multidimensional
nature of the problem, the overall TC-index helps to rank the
countries in one single way, while accounting for the
differences in the sub-index or principal components. A main
advantage of the index compared with many other indices is
that it is parametric, and in aggregation of the different
indicators the weight is not selected on an ad-hoc basis, it is
rather estimated parametrically.
All the six principal components displayed with Eigenvalues greater than unity. The results in Fig. 1 which present
a fictitious screed plot from a PCA also suggested that the six
components were meaningful and thus were retained for
rotation. Combined, the components 1 and 2 accounted for
61.9% of the total variance in the data. Parameters (indicators) and corresponding factor loadings (Eigenvectors) are
presented in Tables A.3 and A.4 in Appendix A, respectively.
In interpreting the rotated factor pattern, an indicator was
said to load on a given component if the factor loading was
0.30 or greater for that component, and was less than 0.30
for the other. Using these criteria, we identify the contributing factors to a principal or sub-index components and
their contributions by the size and sign of the factor loading.
In total, six principal components or sub-indices are
distinguished.3
The principal component 1 (PC1) has 0.3129 weights, PC2
has 0.3064, and so on. The cumulative weights for the six
principal components form 0.8290, in other words, interpreted
as around 83% of the variance in the data can be explained by
2
For a detail survey of literature on the use of composite indices in the
context of development research, see Archibugi et al. (2009) and Heshmati
(2003).
3
Some components factor loading are slightly less than 0.3. These are X2
(0.296), X7 (0.255), X8 (0.292), X9 (0.281), X12 (0.250), X13 (0.245), X14
(0.281), X17 (0.242), X19 (0.275), and X22 (0.292). These components are
important for the index measure, therefore we used our judgment in
considering mathematical roundup to include them in the iteration.

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

Fig. 1. Eigenvalue scree plot.

the six principal components. Moreover, all Eigenvalues greater

than unity here is considered. It indicates that PC1 contributes
around 38% of the variation in the rate of innovation which is
very important in deciding the future innovation policies for
the developing countries.
Governments in their policies must emphasize much on
these principal components results in promoting innovation, as
it significantly affects the rate of innovation in developing
countries. The rationale for this criterion is straightforward.
Each observed variable contributes one unit of variance to the
total variance in the data set. Any component that displays an
Eigenvalue greater than unity is accounting for a greater
amount of variance than had been contributed by one variable.
Such a component is therefore accounting for a meaningful
amount of variance, and is worthy of being retained. Other
principal components have little representation of variation of
data and hence they were excluded.
3.3. Decomposition of TC-index
Table 1 illustrates the six principal components or subindices. The results obtained from a PCA applied to the 28
indicators (see Table A.2 in Appendix A for detailed definition
of the indicators).
The aggregated TC-index, which is an integrated methodology for estimation of innovation rate, is an index for
measuring innovation rate in any nation based on the
performance of different important indicators of science
and technology, technology diffusion, skilled human capital,
research and its outcome, and cross border technology
exchange. Variables such as FDI, internet users, and number
of computers would be completely decided by the national
policy of the governments in developing countries (Fakher,
2012; Kahai, 2004). These parameters have significant
effects on the rate of innovativeness and innovation.

Table 1
The principal components of sub-indices.
Sub-indices

Indicators

PC1
PC2
PC3
PC4
PC5
PC6

X2, X5, X10, X15, X16, X18, X27, X28

X8, X9, X12, X13, X14, X21, X22, X23, X24
X19, X26
X4, X7, X11
X1, X6, X20
X3, X4, X17

215

Accordingly, the TC-index would provide a solid advantage

over other methods previously used in estimating innovation rate.
The TC-index takes into consideration of several weighting
factors related to science and technology, policy making, and
human capital development in most integrated manner.
Though some methodologies were developed for assessment
of innovation rate in developing and developed countries, they
are fragmented in approach. Thus, integration of all the
important weighting factors is non-systematic and simplistic.
For example, the TAI UNDP takes into consideration of several
weighting factors related to technology development, but it
lacks the inclusion of human capital development and policy
making indicators which also play significant role in innovation. Similarly, the technology index developed by WEF takes
into consideration the level of technology and some policy
issues, but it does not cover the human capital development
and science capacity indicators. The industrial development
scorecard developed by UNIDO covers mainly the indicators
of industrial technological aspects. However, it lacks in
weighting factors related to science and technology and
human capital development. The accurate method to assess
the rate of innovation is highly essential for developing
countries, so that they would be in a position to review their
present status of innovation, and to develop future strategies
for enhancing the role of science and technology in
innovation. Technological capability and innovativeness
certainly help them to catch up with the developed
countries. Keeping this in mind, the concept of TC-index has
been developed.
TC-index is an integrated innovation index whose score
ranges from negative to zero and to positive values. The
range depends on the way the index is normalized. The
overall index is a weighted aggregation of six principal
components or sub-indices which were further derived
from 28 indicators of innovation and technology. As weights
in aggregation of the six components into a multidimensional index, we use the share of the total variance
explained by each principal component. A parametric
estimation of the weights and their aggregation based on
their contribution to the explanation of the variation in the
data, together with a better data quality and coverage,
suggest that the index is superior to the existing index
measures. TC-index has a broader coverage of several
numbers of variables which accurately predict the rate of
innovation. For example, the local availability of specialized
training and resources, and average number of citations in
science and education journals have been included. Hence
TC-index gives an accurate measurement of innovation
compared to the other existing innovation measurement
approaches.
4. Empirical results and discussion
4.1. Analysis of the TC-index
According to the result of the TC-index reported in
Table A.5 in Appendix A, among the 61 developing countries
studied, China as an emerging economy recorded the highest
TC-index value (3.19) which reflects its highest potential for
innovation in science. China was followed by Estonia (1.25)

216

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

and Malaysia (1.02) in terms of TC-index value, reflecting

the scope of higher status of innovation in science and
technology. On the other hand, the lowest TC-index value
( 0.56) was recorded for Iran, due to the lower values of
patent, FDI, literacy, and education indicators. Bangladesh,
Tadzhikistan, and Cambodia also registered lowest level of
TC-index value which shows that these countries have less
favorable conditions for innovations.
One important aspect of this study is that the innovation
rate by TC-index was more decided by the specific factors such
as patent, science and engineering and FDI indicator, whereas
the previous methods mostly stressed on HDI. As it covers the
only three broad factors (life expectancy, year of schooling and
GDP per capita) affecting innovation, HDI may not be
considered as accurate method of estimating innovation rate
like TC-index. Equal weights were given to the three components in HDI without providing any justification. We benchmark the HDI as an illustrative to compare with the TC-index. In
terms of HDI value, Estonia leads the table followed by China
and Malaysia.
Though China ranks first in TC-index value, it ranks
second in HDI value. This is due to the fact that the rate of
innovation is more determined by the specific determinants
used in our study, which decides the rate of innovation
better than the HDI, where the general factors for human
development are involved. For example, the diffusion of
technology and innovation is facilitated more by specific
parameters like patenting (Bessen and Maskin, 2009;
Scotchmer and Green, 1990), whereas HDI is mainly affected
by health and literacy, leading to the differences in values of
HDI and TC-index for the same nation.
China again leads in the specific indicators' contribution
that determines the TC-index value. However, as far as the
general factors for human resource development are taken into
consideration, the effect has not been that good relative to
other developing countries. Estonia recorded as a first rank in
HDI where as it ranked second in TC-index value. This
difference is due to the variation between the specific
indicators affecting the rate of innovation such as patents,
internet, computers, scientific journal access, and FDI (one of
the main sources of technology transfer). These indicators
are the main consideration for TC-index value and the
generalized parameters such as literacy and education as
main components of HDI. Malaysia ranked third both in HDI
and TC-index. HDI seem to be a good indicator of both
human development and innovative capacity of developing
countries. As it is revealed from several primary and
secondary sources of literature that the rate of innovation
is more in China than Estonia and Malaysia and other
developing countries, hence TC-index can be considered as
more accurate method than previous methods of measuring
innovation in developing countries.
According to Foster et al. (2012), highly positive correlations among component variables are favorable, as they
can enhance rank robustness. The correlation matrix revealed that the highest correlation was found between pairs
of majority of the indicators (see Tables A.6 and A.7 in
Appendix A for details). Some indicators like X6, X7, X9, X11,
X12 and X13 did not show strong correlation with other
variables. The strong correlation between HDI and average
number of citations per science and education article, FDI

inflows, FDI outflows and gross secondary enrollment rate is

due to the significant allocation of resources in terms of FDI
towards the secondary enrollment and scientific journal
papers, which is directly proportional to the innovation rate
and science development.
Similarly, the high correlation between the local availability of specialized training and resources with that of FDI
towards the secondary enrollment and scientific journal
papers is due to the direct proportional relationship
between training at local level and science development
and FDI, which is also encouraging innovation development.
The correlation between the adult literacy rate and gross
enrollment ratio is due to the interdependency of both of
these factors on each other.
The high correlation between the number of computers
and the internet connectivity is also due to interdependency
on each other. Moreover, the correlation between the
human development ratio and gross secondary enrolment
ratio is due to the fact that the literacy is one of the main
indicators of the human development ratio for estimating its
net value. The positive correlation between the local
availability of average number of citation in Science and
Education journals and FDI inflows is due to the higher
extent of investment towards the development of scientific
journals, which is directly proportional to the innovation
rate (Vinkler, 2008).
We report in Table A.7 in Appendix A the Pearson
correlation coefficients for the TC-index and the principal
components along with the HDI, to show the extent of
correlation among the components and the overall TC-index
and HDI.
4.2. Country group heterogeneity
The developing countries under study have been classified
into three distinct groups based on the overall TC-index score
as follows.
Group 1: Consists of scientifically high potential countries,
where the TC-index score is greater than (0.50). Only six
countries are listed under this group begin from China and
ended with Croatia. It is worth mentioning that only one
country from the Middle East is included in this group, the
United Arab Emirates (UAE). The UAE government should
establish a national innovation plan, policy, council, and
support program with more attention given to those factors
that enhance the technological capabilities. It should provide
specific reforms to improve its national competitiveness
through innovation in different areas related to technological
capabilities. Also to build a strong domestic innovation base,
tackling new technological changes and competitive challenges. This will enable the UAE economy to depend on the
performance of its national innovation system and its
innovation diffusion. For the whole group, although
literacy percentage is remarkable, the efforts must be
made by policy makers to elevate the status of research,
by spending higher share of the state budget on R&D, and
by encouraging scientists for filing more number of patent
applications.
Group 2: Consists of scientifically moderate potential
countries, where the TC-index score ranges from (0.0) to
(0.50). Sixteen countries were categorized under this group,

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

starting with Latvia and ended with Ukraine. According to

Cunska et al. (2013), Latvia's GDP per capita grew significantly
after the end of the pre-transition crisis in the early 1990s.
Between 1993 and 2007 prosperity levels increased by roughly
250%, equivalent to an annual growth rate of more than 7.5%.
The crisis of the last few years has reduced prosperity levels by
more than 20%, pushing real living standards back to the level
of 2005. However, Latvian innovation infrastructure according
to the Cunska et al. (2013) is poor. It is recommended for
countries like Latvia (and other countries within the Group 2)
to take action toward improving the quality of education
system. Policy makers should emphasize on enhancing the
literacy level and education enrollment shares in these
countries. The government policy to eradicate poverty
would help in this regard, as several people do not get
access to education due to the cost of involvement.
Furthermore, to improve quality, the higher education in
these countries should open up to international competition.
Moreover, the policy making should facilitate higher budget
for research institutes and laboratories. The vocational
training reform should aim at developing a genuine
apprenticeship system, in which employers will be directly
involved in training to ensure that training matches the
needs of employers.
Group 3: Labeled as scientifically low potential countries
where the TC-index score is negative. Thirty nine countries
were categorized under this group, starting from Brazil and
ending with Iran. Despite the vast economic reforms in
Brazil during 1990s, the evolution of the national innovation
system was slow, due to lack of active strategies in the
industrial and technological areas to face the decrease in
productivity growth rates and output stagnation (Guennif and
Ramani, 2012). Hence, radical regulatory changes will have
positive effects, and may generate positive externalities similar
to radical technological discontinuities. In general, this group of
countries is far behind. The intensified efforts must be made to
enhance the literacy share and education enrollment percentage, and to reduce the unemployment and poverty rates. The
policy making should allocate a higher amount from the state
budget for university education and schemes for encouraging
scientists for filing more number of patents. Continuous and
heavy investments in human capital enhanced by education
and training enhance a competitive environment under
government coordination with consolidation of active institutions that are essential to drive the knowledge intensive
sectors.
5. Conclusion and recommendations
The present study developed a new measurement tool,
the TC-index, to analyze the level of innovation for
developing countries. The TC-index was estimated for 61
developing countries around the world observed during
20032008. The highest growth rate of innovation was
noticed in China, followed by Estonia and Malaysia among
the developing countries under study. The lowest innovation rate was reported in Iran, Bangladesh, Tadzhikistan, and
Cambodia.
The differences existed in the ranking of some countries
like China when we compare HDI and TC-index values. This
is due to the aggregation of several general factors or

217

indicators for estimating HDI, where specific indicators of

innovation were considered in computation of the TC-index.
Based on the results, a number of recommendations are to
be made. These are aimed at enhancing the rate of
innovation, competitiveness and development in these
countries. The bulk of policy recommendations are as
follows.
First, the specific indicators which determine the rate of
innovation more accurately such as (X1, X2, X5, X6, X8, X12,
X14, X15, X25, X26, X27, and X28) have to be better reflected
and focused on well in the national policy of all the
developing countries under study. The combination should
be determined by the initial condition of the individual
country.
Second, emphasis must be paid to allocate significant
proportion of their annual budgets towards the science
education (X11), gross enrollment rate (X18) and internet
connectivity (X8, X9, and X23). These factors enhance
technological capability and facilitates the faster rate of
innovation in developing countries, by identifying and
accessing for their local needs, and ability adaptable foreign
technology and technology information (Easterby-Smith and
Prieto, 2008).
Third, the policy of national awards for the scientists and
researchers who make sound breakthroughs in science and
technology be established. This will be useful in promoting
researchers to get motivated and encouraged to do more
research for generating innovative technologies in developing
countries.
Fourth, the international relations with other countries
must be bettered in the social, economic, cultural and
scientific spheres. All of the spheres are quite interrelated
and correlated in affecting the fate of the FDI flowing in to
the domestic educational sector. FDI facilitates the innovation spillovers by increasing different types of technologies
and management practices brought by foreign firms (Zhang
et al., 2010).
Fifth, the efforts must be made sincerely towards the
modification of school curriculum and syllabus, so that
higher emphasis is given to the creativity and spontaneity of
the children and problem solving exercises, develop behaviors, skills, and attributes that help to create innovative
practices and cope with changes (SeikkulaLeino, 2010).
This would make impeccable effect on the mindset of the
children, who may opt for the field of research in future,
which in turn would certainly lead to higher rate of
innovation.
Sixth, the companies or corporate houses must be encouraged in forms of relaxation of considerable portion of corporate
taxes for developing an innovative way of product and
production processes, which are environmentally friendly and
economically viable. Firms come up with most innovative
production processes may be given a tax holiday incentive for
specific period, so that other firms would also be motivated to
develop new practices.
Finally, the special focus must be given to the encouragement of local organizations to conduct the specialized
training programs to promote innovation activities, innovation cooperation within and between public and private
organizations and their foreign collaborators in R&D
activities.

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N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

Appendix A

Table A.1
Comparison of existing measurement indices of technology and innovation.Source: Authors' collection

No

Existing
measurement index

Developed by Methodology

Advantages

Disadvantages

Technology
Achievement
index
Science and
technology
capacity index
Technology index

UNDP (2001)

Technology creation was assessed through

national patents and payment of royalty

Assessment of technological
advancement

72

RAND
Wagner et al.
(2001)
WEF (2001)

Focus on science and

technology development

Industrial
development
score board

UNIDO
(2002)

Focus on industrial
development

Measurement of innovation
as part of technology
development is meager
Not much emphasis on
science and technology

75

ArCo

Focus on technology and

industrial development

Not much emphasis on

innovation

Conceptual
framework for
innovation

Archibugi
and Coco
(2004)
Aubert
(2005)

Technology index was computed based

on patents at USPTO and enterprises
nanced Research & Development
Innovation sub index was computed
based on patents at USPTO, survey data
and tertiary enrolment
Technology creation was assessed through
patents at USPTO, international scientic
journal articles and allocation towards
scientic research and development
Technology creation was assessed through
patents at USPTO and international
scientic journal articles
Developed conceptual framework based
on problems of diffusion of innovation in
developing countries

Measurement of innovation
as part of technology
development is meager
Not much emphasis on
innovation

Science and technology role N15

in innovation was not
specically studied.
More generalized approach

Innovation in
government
organizations,
public sector
agencies and
public sector NGOs
i-AFIEFL

Focus on identication of
problems for innovation in
developing countries and
development of effective
strategies and conceptual
framework
Innovation index was developed
for government organizations
and identied both invention
based and diffusion based
innovations in public sector

TC-Index

Dolan et al.
(2008)

National Endowment for Science and

Technology and Arts followed
methodology for computing innovation
index in public sector agencies which is
composed of 54 indicators belonging to
10 different dimensions
Crosta and
i-AFIEFL methodology
Lpez (2009) Innovative Approaches for full inclusion
in e-learning
Current study Estimated by taking in to consideration
of six principals i.e. patent and journal
index, science and education index), FDI
index, researcher and technician index
and computer and internet.

Assessment of technological
advancement

Focus on sociological innovation,

technological innovation and
service customization
Takes in to consideration of most
specic parameters or factors
affecting the process of
innovation and technology
compared to any existing
method of measuring innovation.

Focus on public sector

enterprises only Lacks
application for private
organizations

Only applicable for

e-learning only
The computation of FDII
and II may not reect the
status of innovation in
some countries where their
practice is not common.

No. of
countries

76

87

162

N12

61

Table A.2
The indicators of TC-index and data sources.
No. Label Indicator

Source

X1

United State Patent and Trademark Ofce: available at: http://www.uspto.gov/about/stats/index.jsp#

2
3

X2
X3

X4

X5

X6

X7

Patents Granted by USPTO/Mil. People,

avg 20032007
Patents Granted by USPTO, avg 20032007
International Internet Bandwidth (bits
per person), 2007
Intellectual Property Protection (17),
2008
Foreign direct investment, net inows
(BoP, current US$)
Public Spending on Education as % of GDP,
2007
Availability of e-Government Services, 2008

X8

Internet Users per 1000 People, 2007

X9

Internet Access in Schools, 2008

X10

Human Development Index, 2008

United State Patent and Trademark Ofce, available at: http://www.uspto.gov/about/stats/index.jsp#

World Bank, World Development Indicators and EconStats, available at: http://www.econstats.com/
wdi/wdiv_606.htm
World intellectual property indicator (WIPO), available at: http://www.wipo.int/ipstats/en/
United State Patent and Trademark Ofce: available at: http://www.uspto.gov/about/stats/index.jsp#
World Development Indicator by the World bank, available at: http://data.worldbank.org/products/
data-books/WDI-2007
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
IT.NET.USER.P2
Human Development Report 2009, available at: http://hdr.undp.org/en/content/human-developmentreport-2009

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

219

Table A.2 (continued)

No. Label Indicator
1

X11

X12

X13

X14

X15

X16

17

X17

18

X18

19

X19

20

X20

21

X21

22

X22

23

X23

24

X24

25

X25

26

X26

27

X27

28

X28

Source

Quality of Science and Math Education,

2008
S&E Journal Articles / Mil. People, 2005

World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/

IT.NET.USER.P2
World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
IT.NET.USER.P2
GDP per Capita (in/l current $ PPP), 2007 World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
IT.NET.USER.P2
Computers per 1000 People, 2007
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
Local availability of specialized research
The Global Competitiveness Report (GCR) by the World Economic Forum, available at: http://
and training services, 2008
www.weforum.org/reports/global-competitiveness-report-2013-2014
Average number of citations per S&E
Special tabulations: Average number of citations per S&E article, 2005 Citation counts from set of
article, 2005
journals covered by Science Citation Index (SCI) and Social Sciences Citation Index (SSCI).
Adult Literacy Rate (% age 15 and above),
World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
2007
IT.NET.USER.P2
Gross Higher Education Enrollment rate,
World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
2007
SE.TER.ENRR
Exports of Goods and Services as % of GDP, World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
2007
IT.NET.USER.P2
High-Tech Exports as % of Manuf. Exports, World Development Indicator by the World bank, available at: http://data.worldbank.org/indicator/
2007
TX.VAL.TECH.MF.ZS
Mobile Phones per 1000 People, 2007
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
Total Telephones per 1000 People, 2007
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
Internet users (per 100 people)
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
documents/un-dpadm/unpan038848.pdf
Mobile cellular subscriptions (per 100
United Nations E-Government Survey, available at: http://unpan1.un.org/intradoc/groups/public/
people)
documents/un-dpadm/unpan038848.pdf
S&E Journal Articles, 2005
Science and Engineering Indicator: 2006, provided by National Science Board NSF, available at: http://
www.nsf.gov/statistics/seind06/
S&E articles with foreign co-authorship
Science and Engineering Indicator: 2006, provided by National Science Board NSF, available at: http://
(%), 2005
www.nsf.gov/statistics/seind06/
FDI Inows as % of GDP, 2003-07
United Nations Conference on Trade and Development UNCTAD Report, available at: http://
unctad.org/SearchCenter/Pages/Results.aspx?k=FDI%20Inows%20as%20%25%20of%20GDP
FDI Outows as % of GDP, 200307
United Nations Conference on Trade and Development UNCTAD Report, available at: http://
unctad.org/SearchCenter/Pages/Results.aspx?k=FDI%20Inows%20as%20%25%20of%20GDP

Table A.3
Parameters (indicators) and Eigenvectors (factor loading).
Indicators

PC 1

PC 2

PC 3

PC 4

PC 5

PC 6

X1
X2
X3
X4
X5
X6
X7
X8
X9
X10
X11
X12
X13
X14
X15
X16
X17
X18
X19
X20
X21
X22
X23
X24
X25
X26
X27
X28

0.016
0.296
0.032
0.021
0.317
0.094
0.084
0.072
0.052
0.333
0.040
0.043
0.068
0.051
0.334
0.333
0.195
0.321
0.117
0.033
0.101
0.102
0.190
0.024
0.017
0.086
0.332
0.333

0.248
0.042
0.164
0.223
0.053
0.008
0.185
0.292
0.281
0.029
0.171
0.250
0.245
0.281
0.028
0.027
0.142
0.075
0.191
0.088
0.284
0.292
0.249
0.314
0.028
0.162
0.034
0.030

0.038
0.247
0.174
0.056
0.090
0.029
0.200
0.056
0.044
0.086
0.053
0.105
0.033
0.082
0.086
0.091
0.040
0.079
0.275
0.013
0.036
0.024
0.113
0.061
0.678
0.476
0.095
0.089

0.130
0.054
0.162
0.383
0.028
0.180
0.255
0.152
0.271
0.012
0.469
0.123
0.194
0.077
0.011
0.009
0.144
0.056
0.173
0.384
0.151
0.186
0.090
0.105
0.091
0.218
0.008
0.011

0.429
0.062
0.104
0.298
0.030
0.238
0.251
0.179
0.167
0.001
0.205
0.042
0.095
0.222
0.000
0.006
0.136
0.009
0.007
0.566
0.190
0.122
0.164
0.088
0.053
0.030
0.009
0.002

0.014
0.019
0.548
0.055
0.023
0.598
0.116
0.128
0.039
0.007
0.033
0.233
0.212
0.005
0.005
0.012
0.242
0.058
0.152
0.248
0.130
0.132
0.141
0.022
0.028
0.061
0.001
0.000

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N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

Table A.4
Eigenvalues of the correlation matrix (factor loading weighted parameters).
Principals

Eigen value

Difference

Proportion

Cumulative

PC1
PC2
PC3
PC4
PC5
PC6

8.762
8.578
1.811
1.658
1.313
1.088

0.183
6.767
0.152
0.344
0.225
0.200

0.312
0.306
0.064
0.059
0.046
0.038

0.312
0.619
0.684
0.743
0.790
0.829

Table A.5
The TC-index compared with HDI.
Country

China
Estonia
Malaysia
Lithuania
UAE
Croatia
Latvia
Costa Rica
Jamaica
Kuwait
Thailand
Chile
Tunisia
Saudi Arabia
Mauritius
Panama
South Africa
Mexico
Philippines
Uruguay
Jordan
Ukraine
Brazil
Oman
Argentina
Morocco
Colombia
Kazakhstan
Mongolia
Vietnam
Turkey

TC-index

HDI

Country

Rank

Value

Rank

Value

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

3.192
1.252
1.027
0.566
0.563
0.536
0.478
0.468
0.313
0.297
0.213
0.203
0.148
0.121
0.121
0.119
0.076
0.061
0.046
0.021
0.014
0.009
0.006
0.008
0.018
0.048
0.049
0.087
0.121
0.132
0.154

12.465
14.726
12.128
11.194
12.055
10.41
9.569
9.066
9.087
9.421
8.882
8.85
7.911
8.451
7.858
8.663
7.807
7.721
7.045
7.697
7.077
7.984
8.208
7.628
7.837
6.323
7.137
6.978
6.29
6.215
7.351

2
1
3
5
4
6
7
10
9
8
11
12
17
14
18
13
20
21
27
22
26
16
15
23
25
32
25
28
33
34
24

Georgia
Venezuela
Indonesia
Senegal
Peru
Botswana
Kyrgyz
Lesotho
El Salvador
India
Kenya
Ecuador
Egypt
Armenia
Guatemala
Burkina Faso
Bolivia
Paraguay
Algeria
Pakistan
Nicaragua
Uganda
Cameroon
Ethiopia
Madagascar
Mozambique
Cambodia
Tajikistan
Bangladesh
Iran

TC-index

HDI

Rank

Value

Rank

Value

32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61

0.16
0.166
0.167
0.181
0.192
0.196
0.206
0.226
0.245
0.249
0.254
0.26
0.263
0.287
0.294
0.326
0.328
0.33
0.338
0.349
0.367
0.381
0.381
0.388
0.39
0.401
0.413
0.415
0.507
0.56

6.136
6.667
5.993
5.268
6.203
6.126
5.78
5.73
6.336
6.446
5.348
6.16
5.217
4.988
5.636
4.191
5.407
5.896
5.27
4.177
5.007
4.513
4.405
3.713
4.338
3.874
4.377
4.582
3.455
3.93

37
29
39
47
35
38
41
42
31
30
45
36
48
50
43
56
44
40
46
57
49
52
53
60
55
59
54
51
61
58

Table A.6
Pearson correlation coefcient for the TC-index and its sub-indices.

PC1
PC2
PC3
PC4
PC5
PC6
HDI

PC1
1
0
0
0
0
0.906
0.985

PC2

PC3

PC4

PC5

PC6

HDI

1
0
0
0
0.291
0.059

0
1
0
0
0.237
0.051

1
0
0.166
0.013

1
0.103
0.077

1
0.904

N.T. Khayyat, J.-D. Lee / Technological Forecasting & Social Change 92 (2015) 210223

221

Table A.7
The correlation matrix of the indicators of innovation for 61 developing countries.

X1
X2
X3
X4
X5
X6
X7
X8
X9
X10
X11
X12
X13
X14
X15
X16
X17
X18
X19
X20
X21
X22
X23
X24
X25
X26
X27
X28

X13
X14
X15
X16
X17
X18
X19
X20
X21
X22
X23
X24
X25
X26
X27
X28

X1

X2

X3

X4

X5

X6

X7

X8

X9

X10

X11

X12

1
0.115
0.233
0.459
0.057
0.111
0.342
0.648
0.501
0.004
0.316
0.609
0.473
0.699
0.001
0.008
0.31
0.081
0.404
0.514
0.444
0.49
0.542
0.589
0.06
0.33
0.009
0.006

1
0.074
0.177
0.865
0.221
0.064
0.103
0.237
0.834
0.201
0.061
0.11
0.052
0.834
0.834
0.443
0.819
0.259
0.022
0.198
0.203
0.535
0.131
0.427
0.42
0.827
0.834

1
0.243
0.05
0.046
0.328
0.565
0.307
0.039
0.048
0.396
0.204
0.348
0.04
0.018
0.202
0.01
0.292
0.048
0.412
0.41
0.429
0.449
0.056
0.039
0.018
0.027

1
0.123
0.042
0.576
0.367
0.729
0.094
0.597
0.349
0.43
0.408
0.093
0.091
0.03
0.148
0.417
0.144
0.466
0.427
0.369
0.565
0.018
0.267
0.109
0.099

1
0.238
0.075
0.072
0.271
0.927
0.121
0.015
0.088
0.039
0.926
0.926
0.409
0.927
0.294
0.012
0.132
0.128
0.621
0.211
0.179
0.377
0.923
0.926

1
0.068
0.079
0.098
0.26
0.02
0.072
0.031
0.009
0.258
0.257
0.055
0.276
0.094
0.08
0.035
0.04
0.111
0.051
0
0.087
0.264
0.258

1
0.379
0.55
0.225
0.31
0.371
0.321
0.306
0.226
0.213
0.252
0.165
0.313
0.226
0.526
0.496
0.135
0.424
0.213
0.173
0.216
0.22

1
0.577
0.138
0.261
0.62
0.621
0.828
0.142
0.14
0.486
0.01
0.508
0.249
0.734
0.791
0.659
0.755
0.052
0.359
0.127
0.136

1
0.204
0.728
0.562
0.439
0.595
0.201
0.196
0.217
0.3
0.41
0.26
0.583
0.585
0.611
0.698
0.072
0.355
0.222
0.206

1
0.135
0.075
0.116
0.073
1
0.998
0.509
0.977
0.245
0.082
0.204
0.208
0.627
0.161
0.049
0.22
0.998
0.999

1
0.351
0.17
0.301
0.135
0.122
0.04
0.164
0.309
0.186
0.291
0.284
0.329
0.4
0.04
0.145
0.149
0.135

1
0.47
0.71
0.077
0.077
0.343
0.017
0.245
0.026
0.572
0.626
0.467
0.632
0.134
0.427
0.06
0.073

X13

X14

X15

X16

X17

X18

1
0.681
0.119
0.125
0.376
0.011
0.504
0.006
0.721
0.735
0.354
0.699
0.015
0.354
0.116
0.113

X19

1
0.076
0.072
0.43
0.042
0.493
0.258
0.619
0.682
0.605
0.688
0.01
0.242
0.062
0.077

1
0.998
0.514
0.975
0.248
0.083
0.208
0.212
0.625
0.157
0.049
0.222
0.998
0.999

1
0.518
0.971
0.247
0.076
0.212
0.216
0.624
0.153
0.049
0.203
0.996
0.998

1
0.348
0.457
0.217
0.559
0.604
0.025
0.343
0.024
0.033
0.496
0.51

1
0.169
1
0.052
0.279
1
0.064
0.54
0.107
1
0.057
0.535
0.121
0.983
1
0.7
0.224
0.157
0.394
0.431
1
0.286
0.458
0.133
0.853
0.846
0.702
1
0.023 0.233
0.007
0.003
0.03
0.008
0.011
1
0.304
0.047 0.012 0.343 0.376 0.427 0.421 0.567
1
0.978 0.232 0.087 0.196 0.199
0.635
0.167 0.061 0.224 1
0.976 0.239 0.083 0.202 0.207
0.629
0.163 0.05
0.222 0.998 1

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223

Nabaz T. Khayyat received PhD in Economics, Swiss Management University,

and PhD in Engineering, Seoul National University. He is an Engineering
Economist, who worked for the UN for several years, as well as different
international humanitarian organizations, and recently held a position with the
Kurdistan Regional Government KRG as an Information Management Advisor
in the Ministry of Agriculture and Water Resources. His research eld includes
Energy Economics, Industrial Dynamics, Factor Demand Models and Production
Risk, and Technological Demand forecasting.
Jeong-Dong Lee (PhD, Seoul National University) is an Engineering Economist
who is currently a full professor and an Associate Dean of College of Engineering
at Seoul National University. His research eld includes Data Envelopment
Analysis (DEA), Innovation Theory and Industry Dynamics.