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Can institutions explain cross country differences in innovative activity?

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  • Wang, Cong

Abstract

Motivated by theoretical arguments (see e.g. Romer (2010) and Mokyr (2008)) that assert a positive impact of institutions on R&D, this paper aims to provide some empirical analysis on the relationship between the two variables. In particular, using a core sample of 98 countries over the period 1996–2009, this paper has found a significant direct effect of institutions on R&D intensity. Countries with better institutions qualities as captured by the World Banks’ Worldwide Governance Indicators (WGI) tend to attract more scientists and engineers into the research field and to spend more on R&D as well. This paper has also found evidence that the effect of institutions varies in different economies characterized by different levels of financial development and human capital accumulation, but stays relatively unchanged across countries with different levels of trade openness.

Suggested Citation

  • Wang, Cong, 2013. "Can institutions explain cross country differences in innovative activity?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 128-145.
    • Handle: RePEc:eee:jmacro:v:37:y:2013:i:c:p:128-145
    DOI: 10.1016/j.jmacro.2013.05.009
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    Keywords

    Institutions; Innovative activity; Economic growth;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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