Page 79 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 2, 2015, pp. 73-86

expresses its doubt about specific increase of rate of innovation, and it is very wise
one. Thus, rather than investing heavily in your own sector, you can switch your
innovation efforts to other cost effective and energy efficient sectors/inputs and this
would support our argument too. A lot of time you can find substitutes, and as
substitutes become more attractive or your current deal becomes rough, you are
driven towards alternative sectors.
Hypothesis
After reviewing relevant studies, we can say that, various researches find
influence of technology stock prices, political actions, quality of existing knowledge,
environmental policies, price increases and etc. have impact on innovation in general
and in renewable energy case. Sometimes complex set of factors influence altogether,
and it becomes hard to determine factors which specifically influenced innovation in a
given period. However, considering that increasing oil prices will result in rise in
companies‟ and countries‟ energy input costs, therefore will create a need for
alternative energy sources; and innovation is a good method for decreasing costs in
alternative energy resources; furthermore, taking into account related research:
I hypothesize that, increasing oil prices positively influence innovation in
renewable energy sector.
Empirical study
Method
I will use correlation-regression analysis to find relationship between oil prices
and innovation in renewable energy sector.
Because renewable energy sector involves many fields (wind, solar, biofuel,
geothermal and etc.) and therefore many and complex possible indicators exist, in
my opinion, the best strategy would be choosing one of the fields and analyzing
effects of oil prices on that sector. Thus, one field can actually represent the trends in
renewable energy sector, considering that, they are all alternatives to custom energy
sources and price increases of oil can make companies to shift to any or all of them
as alternative sources and search for new measures to make them more cost
competitive. Furthermore, the chosen field should be open to innovations, which
mean that, innovation should be more clear to detect and patentable. I consider Solar
Photo-voltaic to have these characteristics, therefore, patent applications‟ count
(later “patent count”) in this field can be a good indicator of innovation.

79