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Risk Capital, Private Credit And Innovative Production

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  • James B. Ang
  • Jakob B. Madsen

Abstract

Although ideas production plays a critical role for growth, there has been only a modicum of research on the role played by financial forces in fostering new inventions. Drawing on Schumpeterian growth theory, this paper tests the roles of risk capital and private credit in stimulating knowledge production. Using panel data for 77 countries over the period 1965-2009, it is found that countries with more developed financial systems are more innovative. A stronger patent protection framework, on the other hand, curbs innovative production.

Suggested Citation

  • James B. Ang & Jakob B. Madsen, 2012. "Risk Capital, Private Credit And Innovative Production," Monash Economics Working Papers 08-12, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2012-08
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    Keywords

    Schumpeterian growth; financial development; venture capital;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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