The Schumpeterian Revolution Revisited: On the Linkage Between Financial Development, Technological Innovation and Market Share in Emerging Market Countries

The capitalist order, which is generally depend on the development of financial system, undertakes the function of directing capital to the investment areas where it will be most productive. Therefore, while the capital gains the highest profit on the one hand, it also brings together the technologic progress, which is the most basic input of the production process, on the other hand. Technologic progress, which enables the economies of scale to increase and the international market share to expand, also paves the way for the raise of foreign competitive advantages. In this context, the main motivation of this paper is to examine the linkage between financial development, technological innovation and market share in the context of the Schumpeterian Revolution using canonical correlation analysis for 16 emerging market countries in the year of 2015. The results of the canonic correlation coefficients and canonic cross loading correlations point out that there are strong correlation relations between the canonical variable groups of financial development, technological innovation and market share. In this context, it is observed that the original variables that contribute the most to canonical variables of financial development, technological innovation and market share are the domestic credit level, R&D expenditures and product concentration level, respectively. Therefore, the results of the analysis showing that the Schumpeterian Revolution is valid reflect the importance of finance-technology-market share nexus in emerging market economies.