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Does corruption slow down innovation? Evidence from a cointegrated panel of U.S. states

Oguzhan Dincer

European Journal of Political Economy, 2019, vol. 56, issue C, 1-10

Abstract: I investigate the long-run relationship between corruption and innovative activity using annual data from 48 contiguous U.S. states between 1977 and 2006. Using U.S. data allows me to work with a panel long enough to exploit time series properties of the data. I use two different measures of innovative activity: one measuring the quantity and the other measuring the quality of the patents granted. I also use two different measures of corruption: one based on the number of corruption convictions, the other based on number of corruption stories covered in Associated Press news wires. Following Pedroni (1999, 2000), I estimate the cointegrating relationship between corruption and innovative activity with Fully Modified Ordinary Least Squares (FMOLS). The results indicate that corruption indeed slows down innovation in the long-run.

Keywords: Corruption; Innovation; U.S. states; Panel cointegration (search for similar items in EconPapers)
JEL-codes: D72 O31 (search for similar items in EconPapers)
Date: 2019
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