UNCTAD Insights: The role of innovation policies in SME internationalization: Evidence from Türkiye

This research note investigates the relative innovation performance and international presence of small and medium-sized enterprises (SMEs) in Türkiye. Using administrative data for the period 2006–2020, the empirical analysis shows that government support for research and development (R&D) correlates positively with firms’ innovation activities and R&D expenditure. The results also suggest that innovation activities increase the probability of outward foreign direct investment. The results have important policy implications for Türkiye and developing countries in general. The findings highlight the key role of public incentives in targeting innovative activities towards internationalization of SMEs.