Evaluating the nonlinear impact of Privatization on Innovation in Iran

Document Type : Research Paper

Authors

University of Kurdistan

Abstract

Considering the fundamental role of privatization policy in the economic structure of countries, the present study aims to provide novel evidence on the nonlinear effects of privatization on the innovation process. In this research, the Smooth Transition Regression (STR) method is employed, using data from the period 1991 to 2021 in Iran. This approach enables the gradual identification of changes in the impact of privatization on innovation and allows for examining the behavior of variables across different regimes.The estimation results indicate that privatization exerts a inhibiting effect on innovation at low levels,but when the threshold is crossed, this effect becomes positive and rienforcing.this shows that when the level of innovation in the country is low, transferming companies to the private sector does not help to improve the level of innovation, but when the country innovation is at higher levels, privatization can become an effective stimulus fot strengthening innovative activities and promoting investment in research and development, and the role of ownership policies in encouranging firms to engage in innovative activities becomes more prominent. Also, the urbanization variable has a positive and significant effect on innovation in the first regime, but after passing the threshold value, its positive effect decrease. However, Economic globalization exhibits a negative effect in the first regime and a positive effect in the second regime. Good governance demonstrates a positive and significant impact on innovation across both regimes, indicating that institutional quality, transparency, and accountability play a crucial role in supporting innovation. The findings of this study underscore the importance of designing gradual and targeted privatization policies in conjunction with the strengthening of institutions and innovation infrastructures. They suggest that the combination of privatization with policy and institutional support can serve as an effective catalyst for enhancing innovation and fostering sustainable economic development in Iran.

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منابع
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Innovation Economic Ecosystem Studies
Volume 5, Issue 3
July 2026
Pages 1-24

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