Abstract
This research analyzes the impact of government effectiveness on innovation by using unbalanced panel data from the World Bank on 166 countries spanning 1996 to 2018. We analyze the impact of government efficiency on innovation through various panel fixed-effects models, while incorporating control variables such as GDP, education, and industrial structure into the analysis framework. The empirical results conclude that, in our selected countries, government efficiency has a significantly positive impact on innovation output and more importantly verify the positive impact from the improvement of bureaucracy quality on innovation. The evidence again shows the positive impacts of government efficiency on innovation output by addressing endogenous and robustness checking via the series of methods. Furthermore, the heterogeneity and mechanism of this relationship would be explored. Therefore, the research results provide an alternative method for national governments to promote innovation output by improving government effectiveness.
Highlights
Since the start of the 21st century, technological innovation as an important approach has attracted attention from many national countries looking to enhance their levels of growth and quality for their economies (Aghion et al, 2007)
This study tests the effects of government efficiency on innovation output using the fixed effect model, dynamic GMM estimation, and Poisson model for 166 countries during 1996– 2018
The education, per capita GDP, energy density, and openness-related indicators have been utilized as explanatory variables to more closely characterize the relationship between government effectiveness and innovation output
Summary
Since the start of the 21st century, technological innovation as an important approach has attracted attention from many national countries looking to enhance their levels of growth and quality for their economies (Aghion et al, 2007). Scholars focus more on a government’s various policies and the improvement of related systems by various countries, but there is a lack of understanding on related issues concerning the influence of the implementation of policies on innovation. Technological and Economic Development of Economy, 2021, 27(3): 626–655 activities, and imperfect implementation of the regulations will hinder innovation activities (Wang et al, 2020) As this view has been widely accepted, this study investigates a relationship between government efficiency and innovation output. This research fills the gap in exploring the path of innovation promotion from the perspective of the overall institution of government and provides a fresh view of the political economy
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