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Cross-Border Institutions and the Globalization of Innovation

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  • Bian, Bo
  • Meier, Jean-Marie
  • Xu, Ting

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.

Suggested Citation

  • Bian, Bo & Meier, Jean-Marie & Xu, Ting, 2021. "Cross-Border Institutions and the Globalization of Innovation," LawFin Working Paper Series 23, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    • Handle: RePEc:zbw:lawfin:23
    DOI: 10.2139/ssrn.3503092
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    More about this item

    Keywords

    Innovation; technology diffusion; globalization; cross-border institutions; bilateral investment treaties;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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