78 Pages Posted: 31 Jul 2016 Last revised: 12 Oct 2017
Date Written: October 11, 2017
We study the impact of inclusive institutions on innovation using novel, hand-collected, county-level data for Imperial Germany. Exploiting the timing and geography of the French occupation of different German regions after the French Revolution as an instrument for institutional quality, we find that the number of patents per capita was more than twice as high in counties with the longest occupation as in unoccupied counties. Conservative social norms and low financial development weaken the impact of institutions on innovation. The results suggest that innovation is a quantitatively plausible channel for the previously documented effect of institutions on economic prosperity.
Keywords: Innovation, Patents, Institutions, Institutional Reform, Economic Growth
JEL Classification: O31, O43, N43, N13, K40, P16
Suggested Citation: Suggested Citation
Donges, Alexander and Meier, Jean-Marie A. and Silva, Rui, The Impact of Institutions on Innovation (October 11, 2017). Available at SSRN: https://ssrn.com/abstract=2815541 or http://dx.doi.org/10.2139/ssrn.2815541