Cross-Border Institutions and the Globalization of Innovation

Bo Bian, Jean-Marie Meier and Ting Xu

No 23, LawFin Working Paper Series from Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin)

Abstract: We identify strong cross-border institutions as a driver for the globalization of in-novation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral in-vestment treaties as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other. They also increase R&D collaborations. These interactions result in techno-logical convergence. The effects are particularly strong for process innovation, and for countries that are technological laggards or have weak domestic institutions. Increased inter-firm rather than intra-firm foreign investment is the key channel.

Keywords: Innovation; technology diffusion; globalization; cross-border institutions; bilateral investment treaties (search for similar items in EconPapers)
JEL-codes: F21 F61 G18 G38 K33 O31 O33 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cse, nep-cta, nep-gro, nep-ino, nep-int, nep-law, nep-ppm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:lawfin:23

DOI: 10.2139/ssrn.3503092

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