Cross-Border Institutions and the Globalization of Innovation

72 Pages Posted: 1 Jan 2020 Last revised: 22 Feb 2022

See all articles by Bo Bian

Bo Bian

University of British Columbia

Jean-Marie Meier

University of Texas at Dallas

Ting Xu

University of Virginia - Darden School of Business

Date Written: July 20, 2021

Abstract

We identify strong cross-border institutions as a driver for the globalization of innovation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral investment treaties (BITs) as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other; they also increase R&D collaborations. Consistent with BITs reducing investment frictions, the results are particularly strong for process innovation and for countries with weak domestic institutions. Foreign investments with high frictions, such as inter-firm investments in R&D-active sectors, are most responsive to BITs.

Keywords: Innovation, technology diffusion, globalization, cross-border institutions, bilateral investment treaties

JEL Classification: F21, F61, G18, G38, K33, O31, O33

Suggested Citation

Bian, Bo and Meier, Jean-Marie and Xu, Ting, Cross-Border Institutions and the Globalization of Innovation (July 20, 2021). LawFin Working Paper No. 23, Available at SSRN: https://ssrn.com/abstract=3503092 or http://dx.doi.org/10.2139/ssrn.3503092

Bo Bian

University of British Columbia ( email )

HA 865, UBC Sauder School of Business
2053 Main Mall, Vancouver, BC V6T 1Z2
Vancouver, British Columbia V6T 1Z2
Canada

HOME PAGE: http://bo-bian.com/

Jean-Marie Meier

University of Texas at Dallas ( email )

Jindal School of Management
800 W. Campbell Road
Richardson, TX 75080
United States

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

Ting Xu (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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