Government Structure and the Political Economy of Technological Innovation
41 Pages Posted: 31 Aug 2007
Date Written: November 2006
Are decentralized states better at technological innovation than centralized states? Economic and political theorists, from Hayek to Mokyr, suggest that government decentralization offer advantages for innovators. Decentralized governments are widely seen as agile, competitive, and well structured to adapt to innovation's gale of creative destruction. Meanwhile, centralized states, even when democratic, are subject to capture by status-quo interest groups which use their influence to promote policies which ultimately restrict long-run technological change. Therefore decentralized government is increasingly perceived as a necessary institutional foundation for fostering long-run technological innovation. I test this theory using data on international patent activity, scientific publications, and high-technology exports.
Keywords: Innovation, Technology, Technological, Government, Decentralization, Federalism
JEL Classification: O3, O11, P26
Suggested Citation: Suggested Citation