Abstract
This paper analyses the link between institutional quality and innovation for 103 Italian NUTS-3 provinces during the 2004–2012 period, providing fresh evidence for a country with great disparities in both aspects. Results suggest that institutional quality largely drives innovation performance across provinces, and to some extent it contributes to explain the great North-South Italian divide in terms of innovation. The findings are robust to the inclusion of spatial spillovers and to the control of potential endogeneity. Moreover, we find uneven effects for different levels of institutional quality and for its distinct pillars. These results can be useful for the design of more specific innovation policies.
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