The effects of the quality of institutions on innovation: Macroeconomic country analysis

By Fatma Mrad, Nourhen Bouaziz

This work aims to analyze the relationship between the quality of institutions and innovation. The available empirical studies have analyzed this relationship for the case of firms. Compared to these studies, we estimate five dynamic panel models by the Generalized Moment Method for a 53-country sample (composed of 17 developed countries and 36 developing and emerging countries) observed over the 1996-2013 period. We focus on three institutional variables, namely: control of corruption, government effectiveness and quality of regulation; and on two synthetic institutional indicators. The estimations results indicate that the intensification of the fight against corruption favors innovation. In addition, innovation is stimulated by an institutional environment characterized by effective government intervention in the economy and the implementation of sound policies and regulations. JEL Codes: O31, O5, O17, H1, K


  • innovation
  • institutions
  • control of corruption
  • government effectiveness
  • regulation quality
  • dynamic panel
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