Macro barriers to business and innovation in developing economies: evidence from Egyptian, Moroccan, and Tunisian SMEs

ABSTRACT Investing in knowledge and innovation is recognised as a key driver of economic growth in any country. This paper contributes to the thin literature on innovation determinants in developing economies by empirically examining the impact of macro-level obstacles to business on small and medium-sized enterprises’ innovations in three Arab countries, namely, Egypt, Morocco, and Tunisia. While R&D emerged as the main factor that impacts positively and significantly the likelihood that firms innovate and succeed in producing a diverse set of product and process innovations, different combinations of other factors proved to affect innovation in each of the three countries.