The impacts of government ideology on innovation: What are the main implications?

Abstract

This study investigates the relationship between government ideology and technical innovativeness of the whole country by using multinational panel data covering 110 countries from 1995 to 2015 and by employing comprehensive indicators for technical innovation, i.e. trademark and patent application in empirical research. We utilize the panel generalized method of moment (GMM) technique to introduce dynamic variables in order to avoid the bias caused by potential endogeneity. Next, we generate three cross items to examine whether the effect of government ideology on technical innovation differs under different circumstances. We then change the measurement of government ideology to assure the reliability of our empirical results, further investigate whether the changes of political ideology influence technical innovation, and carry out a robustness test by dividing the whole sample into two sub-samples based on the level of democracy, by employing two samples which limited by 3 main coalition parties in government at most, such as re-elected government and non-alternated government in countries. Overall, the empirical results show that a leftist ruling party inhibits the progress of technical innovation, whereas a right-wing ruling party promotes the appearance of new technology. The effect of government ideology on innovation is not similar under some circumstances. More evidence is presented by using two dummy variables to represent left-wing and right-wing.