Do Institutions Impact Innovation? (original) (raw)
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Does institutional quality impact innovation? Evidence from cross-country patent grant data
Applied Economics, 2013
This paper contributes to the literature on institutions and economic growth by conducting an empirical examination of the links between innovation and institutions. Using cross-country data and the instrumental variable method, this study finds that institutional arrangements explain much of the crosscountry variations in patent production. We find evidence that control of corruption, market-friendly policies, protection of property rights and a more effective judiciary system boost an economy's rate of innovation. Our results also imply that controlling for institutional quality; geographic-related variables are not significant in explaining patent production. This paper also finds evidence to support the idea that in the long-run human capital accumulation is an important factor in shaping institutions.
Institutions, Innovation and Growth: Cross-Country Evidence
SSRN Electronic Journal
This paper looks at the link between the quality of economic institutions and innovation, and innovation and growth. We construct a measure of the innovation content of individual manufacturing industries and show that countries with stronger economic institutions specialise in more innovationintensive industries. Our results also provide evidence that industries involving higher levels of innovation grow relatively faster in countries with better economic institutions. The results suggest that innovation is an important channel through which higher-quality economic institutions contribute to better growth performance in the long run.
Institutions, Innovation and Economic Growth
2008
This article contributes to the growth literature by developing a formal growth model that provides the basis for studying institutions and technological innovation and examining how human capital and institutional constraints affect the transitional and steady state growth rates of output. The model developed in this article shows that the reason that growth models a la Romer (1990) generate endogenous
Institutions and Innovation: Evidence from Countries at Different Stages of Development
The Pakistan Development Review, 2017
This paper empirically analyses the impact of institutions, both formal and informal, on innovation performance of sampled countries at different stages of development. Data of 72 sampled countries on Research and Development Expenditures, numbers of article published, human capital, trade openness, internet users are collected from United Nations Educational, Scientific and Cultural Organisation (UNESCO), International Country Risk Guide (ICRG) and World Bank database. Formal and informal institutions indexes are constructed using data from Country Risk Guide and The World Value Survey (WVS). Fixed effect and System GMM technique are used to estimate the dynamic relationship between innovation performance and institutional indexes. The study finds positive significant effect of institutions on innovation in case of aggregate sample of developed and developing countries. However, the effects of formal institutions are more significant in case of sample of developed countries, while in developing countries informal institutions are found more effective than formal institutions in affecting innovation performance. The results also show that both formal and informal institutions are supplementary to each other in case of developing countries. Therefore, it is suggested that focus should be given to informal institutions. Moreover, collective initiatives be encourage in developing countries to have diverse ideas from different sectors of the countries. In addition, developing countries should initiate collaborative research projects with technologically advanced countries research and education institutions so as to learn from each other's ideas and experiences.
Innovation and institutions: Examining the black box
2005
This dissertation contributes to the literature by investigating the links between institutions and innovation from both a theoretical and an empirical standpoint. Specifically, this dissertation (i) develops a theoretical growth model that explicitly accounts for the influences of institutions on technical innovation and output production; (ii) specifies an empirical model suitable to examine the affect of institutions on technical innovation based on a theoretical model; and (iii) tests if different measures of institutions (i.e., Control of Corruption, Rule of Law, Regulatory Quality and Expropriation Risk) have differentiated impacts on innovation. A major prediction of the theoretical model is that better institutional arrangements boost innovation and thus economic growth. The lack of right institutions will retard or prevent the utilization of newly invented inputs in the productive process, leading to relatively lower levels of output. Therefore, controlling for all other de...
Innovation and institutional quality: Evidence from OECD countries
Global Journal of Business, Economics and Management, 2019
Focusing the effect of innovations on economic growth, the literature has not adequately cared about what determines the innovations or innovative capacity. However, policy makers and business leaders have accepted the need for creating platforms and institutions that promote innovative activities since it was accepted that innovations were the basic key to economic growth. This study focuses on the effect of institutions or institutional quality on the innovations. In this study where OECD countries have been selected as the sampling (2002-2016 period) and World Bank's Worldwide Governance Indicators represent institutional quality while the number of patent application represents the innovation, the effect of institutional quality on the innovations has been examined through the methods of panel data analysis. Innovation is positively related to voice and accountability, political stability and absence of violence and rule of law while it is negatively related to control of corruption. Moreover, there has been no relationship determined between government effectiveness and regulatory quality and innovation. According to the findings, voice and accountability, political stability and absence of violence and the rule of law are essential for the emergence or increase of innovations in OECD countries.
Institutions as the Main Determinant in Economic Growth
ETIKONOMI
The studies on human capital and technological progress have given incredible insights on how countries in the world differ from one another. Yet there are more than those two reasons to account for differences among countries. There is a third reason why a country would differ in terms of its economic development progress, namely institutional factors. Hence developing institutional indices would give a deeper explanation than a mere theory. On the other hand, we can corroborate the institutional index with the general theory that low-quality institutions will impact an economy negatively. This study seeks to broaden the understanding of causes of economic growth by incorporating institutional index into a semi-endogenous growth model and finds a relationship between that index with human capital and technological progress
Comparative Economic Research, 2016
The objective of this paper is to investigate the effects of institutions on national rates of inventive activity. Invention, part of the innovation process, is acknowledged as one of the driving forces behind economic growth, and patent statistics are frequently used as a measurable indicator of inventive output. Thus this paper explores the relationship between national patent statistics and measures of institutional quality. As a result of our research, the effect of the “threshold of inventive activity” was observed. This effect demonstrates that when countries reach a certain level of institutional development and attain a general institutional climate conducive to inventive activity, the number of patent applications begins to sharply increase. The paper contributes to the body of evidence that confirms that a combination of fundamental institutions like the rule of law or freedom of expression, which are not necessarily aimed at boosting innovation, create an overall environm...