Education, Training and Innovation in Transition Economies: Is there a Link?

The aim of this paper is to establish the effect of on-the-job-training and university education on the firm’s innovation decision in transition economies of Eastern Europe and the Former Soviet Union. The authors use the 2002 and 2005 waves of the Business Environment and Enterprise Performance Surveys. Their findings, based on a mixed discrete-continuous model with endogenous variables in the firm’s innovation equation, suggest that further investments in education will not lead to necessary improvements in the firm’s demonstrated ability to innovate. This is in contrast to on-the-job-training, which they show increases a firm’s ability to innovate in countries with transition economies.