Testing for Convergence Innovation and Club Clustering in Selected Economies 1995-2017

change in micro and macro innovation determinants. It is
characterized by firms' search for innovative opportunities in other
economic sectors and in their development from mining through
heavy industry to material processing sector, discovering new
technologies that connect individual products to a more integrated
global system, diversifying, ensuring technical scope growth, and
start-ups contributing to new managerial leadership. The aim of this
study is to contribute to our knowledge of convergence innovation by
providing empirical evidence on it. To this purpose, we use a
nonlinear time-varying factor model to test for convergence
innovation and countries' club clustering. For the sample of 29
countries from 1995 to 2017, we identify two significant convergence
clubs and one divergent group (Cyprus, Czech Republic, and The
Netherlands). The empirical evidence indicates that innovation
singularity could appear as a significant barrier and limiting factors
for firms' and countries' growth in the future. Design and new product
development trends in these countries follow a different decoupling
path from the rest of the sample. Policymakers and practitioners
should carefully evaluate innovation determinants and constraints
(decoupling drivers) in setting up innovation policies on a micro and
macro level.