Cross-Border Institutions and the Globalization of Innovation

66 Pages Posted: 1 Jan 2020

See all articles by Bo Bian

Bo Bian

University of British Columbia

Jean-Marie A. Meier

University of Texas at Dallas

Ting Xu

University of Virginia - Darden School of Business

Date Written: December 12, 2019

Abstract

This paper identifies weak cross-border institutions as an important constraint on the geographic boundaries of innovation. We construct novel measures of innovation diffusion and collaboration at the country-pair level using 70 million patents from more than 100 patent offices. Exploiting the staggered signing of Bilateral Investment Treaties (BITs) as shocks to cross-border contract enforcement and property rights, we show that signatory countries significantly increase technology adoption and sourcing from each other after the signing of a BIT. They also increase R&D collaborations, resulting in the convergence of their technologies. The effects are particularly strong for countries with weak domestic institutions, technological laggards, and for process innovation. Increases in the mobility of financial and human capital are the key channels.

Suggested Citation

Bian, Bo and Meier, Jean-Marie A. and Xu, Ting, Cross-Border Institutions and the Globalization of Innovation (December 12, 2019). 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 A. 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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