DOES ANTI-CORRUPTION FACILITATE OR HINDER TECHNOLOGICAL INNOVATION?

Qian Zhao () and Chi-Wei Su
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Qian Zhao: School of International Trade and Economics, Central University of Finance and Economics, Beijing 100081, P. R. China
Chi-Wei Su: School of Economics, Qingdao University, Qingdao 266100, P. R. China

The Singapore Economic Review (SER), 2024, vol. 69, issue 03, 1151-1169

Abstract: Innovation is a major economic growth contributor, which is often hindered by corruption. However, this relationship is not always supported. This study analyzes the interrelation between anti-corruption (AC) and technological innovation (TI) in China by applying the bootstrap rolling-window full-sample and subsample Granger causality test. The results confirm that the influence of AC on TI is two-fold. On the one hand, AC positively influences TI, indicating that it facilitates TI. This finding supports the “sanding-the-wheels†hypothesis, which postulates that corruption impedes innovation. On the other hand, there is a negative influence from AC to TI, which is mainly caused by the COVID-19 pandemic. Further, the results show that TI positively influences AC, implying that TI can affect government’s AC-related decisions. Based on these findings, governments should coordinate their efforts toward innovation and AC, while firms should adopt innovation-driven strategies for long-term growth.

Keywords: Anti-corruption; technological innovation; rolling-window; bootstrap (search for similar items in EconPapers)
JEL-codes: C32 G38 O32 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590823500297

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