Institutions, Innovation and Growth: Cross-Country Evidence

Abstract

Summary This paper looks at the link between the quality of economic institutions and innovation, and innovation and growth. We construct a measure of the innovation content of individual manufacturing industries and show that countries with stronger economic institutions specialise in more innovationintensive industries. Our results also provide evidence that industries involving higher levels of innovation grow relatively faster in countries with better economic institutions. The results suggest that innovation is an important channel through which higher-quality economic institutions contribute to better growth performance in the long run.