_Second_ , a firm-level analysis drawing from ES data was undertaken to assess the diversity of innovation activities; the following developing East Asian countries were covered in the data set: Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Thailand and Vietnam. Results show that product innovation and marketing innovation are the prevalent forms of innovation within this group of countries. Data also suggest that innovation activities occur in all sectors, not only in manufacturing; other service sectors and IT services present the highest innovation rates. In addition, once the novelty of reported innovations is accounted for, the proportion of firms reporting product innovations that are new to the market is positively correlated with income level. This corrects for firms in lower income countries being more likely to report marginal innovation or even imitation as innovation. When it comes to the use of innovation inputs, there is evidence that a smaller fraction of firms undertakes R&D as income level increases, while the spending among these firms doing R&D increases across the income span (when taking Indonesia out of the analysis). The analysis also showed that other innovation inputs, besides R&D, matter to innovation activities: the probability to innovate increases when firms run R&D activities, offer formal training to develop innovative products or processes, and acquire or licenses new technologies, even when controlling for key firm characteristics (such as size, age, ownership, export status) as well as sector and size of the city where the firm operates.

_Third_ , a firm-level assessment drawing from WMS was conducted to shed light on managerial capabilities, a critical innovation input. Results showed that the average managerial quality of China and Vietnam, the only two developing East Asian countries covered by the survey, are ranked respectively at 20th and 24th, among 29 countries. Results also showed that the tail of poorly-run firms is much fatter in China and Vietnam when compared to the United States. In addition, results from quantile regression showed that the score of the United States is consistently higher than China and Vietnam at all relevant deciles. Finally, when it comes to factors that drive the accumulation of managerial capabilities, results presented by Maloney and Sarrias (2017) point to ownership structure and human capital of the management level as key drivers of the managerial convergence path.

The analysis presented in this paper did not intend to assess the specificities of how governments can support the development of innovation capabilities and the optimization of returns to innovation, even less the capabilities needed at the government level to develop an effective innovation policy. However, the results presented here pointed to some key areas that could help strengthening the design and development of innovation policies across developing East Asia. First, it is key to adopt a broad view of innovation policy and invest in missing complementary factors. In this regard, policies to promote innovation should not be restricted to a science and technology ministry; supporting the development of business and regulatory environments that are conducive to overall firm performance and the accumulation of any type of capital (not only knowledge capital) is also expected to improve innovation returns. In addition, boosting innovation performance goes beyond the promotion of R&D; other complementary inputs should be taken into consideration, such as training for innovative activities, acquisition/licensing of technology and managerial practices. The latter deserves special attention. As highlighted by Cirera and Maloney (2017), low managerial capabilities exert direct influence on innovation activities, as they prevent firms from identifying productive opportunities, evaluating their feasibility, managing their risk, and allocating human resources. In this turn, policies designed to promote the upgrade of organization and managerial practices (as management extension 22