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Risk Capital, Private Credit And Innovative Production

  • James B. Ang
  • Jakob B. Madsen

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.

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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 08-12.

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Length: 30 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:mos:moswps:2012-08
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