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Institutional quality and innovation: some cross-country evidence

Institutional quality and innovation: some cross-country evidence PurposeThe purpose of this paper is to examine the cross-country variation in innovation and propose that it can be explained by the presence of market institutions using the Global Innovation Index.Design/methodology/approachThis paper uses ordinary least squares with region and OECD fixed effects to test whether more economic freedom is associated with more innovation.FindingsThe findings reveal that the effect of market institutions on innovation is promoted by both knowledge and creativity. When innovation is broken down into its component measures, the results suggest that a high-quality legal system is associated with more creativity and free trade is associated with greater knowledge.Originality/valueThese findings provide evidence that economic freedom matters for innovation through both creativity and knowledge, particularly through the protection of property rights and the legal system and free trade. Policy makers desiring to spur innovation may want to examine the level of freedom in private ownership and the reduction of trade barriers as a prerequisite for innovation policy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Enterpreneurship and Public Policy Emerald Publishing

Institutional quality and innovation: some cross-country evidence

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References (48)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2045-2101
DOI
10.1108/JEPP-04-2016-0015
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to examine the cross-country variation in innovation and propose that it can be explained by the presence of market institutions using the Global Innovation Index.Design/methodology/approachThis paper uses ordinary least squares with region and OECD fixed effects to test whether more economic freedom is associated with more innovation.FindingsThe findings reveal that the effect of market institutions on innovation is promoted by both knowledge and creativity. When innovation is broken down into its component measures, the results suggest that a high-quality legal system is associated with more creativity and free trade is associated with greater knowledge.Originality/valueThese findings provide evidence that economic freedom matters for innovation through both creativity and knowledge, particularly through the protection of property rights and the legal system and free trade. Policy makers desiring to spur innovation may want to examine the level of freedom in private ownership and the reduction of trade barriers as a prerequisite for innovation policy.

Journal

Journal of Enterpreneurship and Public Policy – Emerald Publishing

Published: Apr 10, 2017

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