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Innovation performance is not only determined by direct inputs. It is also influenced by a wide range of policies and attributes of the business environment. The policies include both those specifically designed to strengthen innovation outcomes and those that are guided by other concerns, but may still have an impact on innovation. The environment for innovation is likely to be especially sensitive to the degree of protection of intellectual property rights; the extent of tax-based incentives for innovation; competition policy; product and labor market regulations; the development of financial markets; and the openness of the economy to trade and investment.
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