Innovation is a key success factor for enterprises and a factor in creating wealth for the country. Hence, it's very important to study its determinants. Although the financial and human resources in research and development (R&D) have been the subject of several empirical studies, the efficient use of these resources has been ignored and has not been recognized as a determinant of innovation. The present study attempts to fill this gap in the literature. Its purpose is to test the effect of R&D efficiency on technological innovation in 14 developing countries during the period (2000-2010). After estimating the R&D efficiency scores by the stochastic frontier approach, we estimated a linear regression model where innovation is explained by these efficiency scores. The results show that R&D efficiency levels have a significant positive impact on the international rate of innovation. The main conclusion from this study is that to innovate, countries need to increase not only the amount of resources for innovation activity, but also the quality of management of existing resources.
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