Does LGBT Inclusion Promote National Innovative Capacity?

Abstract

This paper investigates the relationship between the social inclusion of lesbian, gay, bisexual and transgender (LGBT) people and technological innovation. It establishes that LGBT inclusion helps foster human capital skills, thus strengthening national innovative capacity. Exploiting cross-country data, this research provides suggestive evidence that social tolerance toward homosexuality is positively correlated with the economic complexity index, a novel measure of cross-country differences in innovative capabilities. An individual-level analysis, based on data from the World Values Survey, reveals that respondents who self-report tolerance toward homosexual acts tend to have positive attitudes toward technological innovation, ceteris paribus. This lends credence to the international evidence. Further analyses indicate that the link between LGBT inclusion and innovation is partially mediated through the accumulation of human capital. The main findings suggest that the social exclusion of LGBT people, at least to some extent, hinders innovation, thus impeding economic development.