Institutions and R&D engagement of SMEs in Laos

ABSTRACT We investigate the association between research and development (R&D) engagement by small and medium enterprises (SMEs) and the institutional environment in Laos. We employed multivariate imputation by chained equations and full Bayesian inference to analyse data from the 2016 and 2018 World Bank Enterprise Surveys for Laos. Our findings show that Lao SMEs that engage in R&D are likely to experience more frequent tax inspections and more solicitation of bribes by government authorities, than Lao SMEs that do not engage in R&D. Firms that perceive political uncertainty as an obstacle to doing business are 28% less likely to engage in R&D activities. These findings raise concerns about the effectiveness of institutions in supporting intellectual property rights in Laos, and have policy implications for promoting productivity of small and medium-sized firms.