The Impact of Institutions on Innovation

93 Pages Posted: 31 Jul 2016 Last revised: 20 Jul 2018

Alexander Donges

University of Mannheim - Department of Economics

Jean-Marie A. Meier

University of Texas at Dallas

Rui Silva

London Business School - Department of Finance

Date Written: January 18, 2018

Abstract

We study the impact of inclusive institutions on innovation using novel, hand-collected, county-level data for Imperial Germany. We use 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. The impact of institutions on innovation is amplified in counties with a developed banking sector, suggesting that financial development and inclusive institutions are complements in the production of innovation.

Keywords: Innovation, Patents, Institutions, Institutional Reform, Economic Growth

JEL Classification: G38, O31, O43, N13, K40

Suggested Citation

Donges, Alexander and Meier, Jean-Marie A. and Silva, Rui, The Impact of Institutions on Innovation (January 18, 2018). Available at SSRN: https://ssrn.com/abstract=2815541 or http://dx.doi.org/10.2139/ssrn.2815541

Alexander Donges

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

HOME PAGE: http://donges.vwl.uni-mannheim.de/

Jean-Marie A. Meier (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

HOME PAGE: http://www.jean-mariemeier.com/

Rui Silva

London Business School - Department of Finance ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

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