National innovation systems: a comparative study of the Baltic and South Caucasus States

Abstract

This article aims to identify the determinants of the development of national innovation systems in the globalised world and to carry out a cluster analysis of innovation systems of the South Caucasus and Baltic States. To this end, an Innovation System Development Index (ISDI) comprising 46 indicators was developed. The authors employed the macro-clustering method, as well as aggregation and combination techniques for parameters and sub-indices. Additionally, complete-linkage and K-means methods were used to group the countries. Kalinsky-Kharabaz and Duda-Hart indices, as well as dendrograms, were found to be the most effective techniques for producing the novel classification proposed in this contribution. It was demonstrated using the former method that national innovation systems exhibit qualitatively different cluster characteristics and follow different development trends. According to the findings, Estonia ranks first on the index among the study countries with (ISDI = 0.77), while the South Caucasus states form two subgroups. Armenia (ISDI = 0.50) and Georgia (ISDI = 0.53) comprise a relatively developed subgroup, whereas Azerbaijan (ISDI = 0.44) constitutes a separate unit, delivering a less remarkable performance. The latter method revealed that the Baltic States form the most developed cluster group, with Estonia once again at the top of the index (ISDI = 0.85). The Baltic States and the South Caucasus states comprised two separate groups. Except for the patent activity sub-index, Estonia outperforms the other study countries on all sub-indices. Armenia and Georgia rank relatively high on the patent activity sub-index, whereas Azerbaijan performs well on the innovation activity and infrastructural development sub-indices. These findings would allow the South Caucasus countries to draw on the experience of the Baltic states in identifying challenges to the development of their national innovation systems. Overall, the study demonstrated the possibility of classifying the countries of the two post-Soviet regions based on the similarity of national innovation systems.