Do Good Institutions Enhance the Effect of Technological Spillovers on Productivity? Comparative Evidence from Developed and Transition Economies

Technological Forecasting and Social Change, Vol. 94, p. 133-154, 2015

45 Pages Posted: 10 Aug 2017

Date Written: June 15, 2013

Abstract

This paper argues that institutional quality has both direct and indirect (moderating) effects on productivity of countries. These hypotheses are tested using a battery of institutional proxies (governance, economic freedom, intellectual property rights and ease of doing business) and two channels for technological spillovers (trade and FDI) in a panel of developed and transition economies. The results confirm that good institutions have positive and similar effects on productivity across the board. Moreover, they moderate the relationship between foreign technological spillovers and productivity, contingent on the specifics of institutional proxies and countries considered. Thus, governance, IPR and economic freedom exhibit negative moderation in the case of transition economies, while easiness of doing business moderates positively this relationship for both groups of countries. The moderation effects are larger for transition economies and trade-related spillovers. Overall, these results suggest a trade-off for transition countries between pursuing institutional upgrades and increasing their gains from technological spillovers.

Keywords: Institutions; Productivity; R&D; Technological Spillovers; Trade; Foreign Direct Investment

JEL Classification: F10, F21, O43, O57, O30, E02

Suggested Citation

Krammer, Sorin M.S., Do Good Institutions Enhance the Effect of Technological Spillovers on Productivity? Comparative Evidence from Developed and Transition Economies (June 15, 2013). Technological Forecasting and Social Change, Vol. 94, p. 133-154, 2015, Available at SSRN: https://ssrn.com/abstract=2402076 or http://dx.doi.org/10.2139/ssrn.2402076

Sorin M.S. Krammer (Contact Author)

Surrey Business School ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

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