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Financing Creative Destruction

Author

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  • Samaniego, Roberto

Abstract

This paper uncovers evidence of s potentially important channel linking financial development to growth: the financing of innovations introduced by entrepreneurs. Using internationally comparable data on European countries, entry and exit in research-intensive industries are found to be disproportionately sensitive to the level of financial development. Furthermore, financial development is related to increased R&D spending. The results are robust to several different measures of financial development, and are supported by surveys of the sources of finance used by entrepreneurs. The evidence suggests that intellectual property rights provide the institutional underpinning for financial markets to direct funds towards innovative entrepreneurs.

Suggested Citation

  • Samaniego, Roberto, 2009. "Financing Creative Destruction," MPRA Paper 22348, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22348
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    File URL: https://mpra.ub.uni-muenchen.de/22348/1/MPRA_paper_22348.pdf
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    References listed on IDEAS

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    7. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
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    Cited by:

    1. Ilyina, Anna & Samaniego, Roberto, 2012. "Structural change and financing constraints," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 166-179.

    More about this item

    Keywords

    Entry; exit; financial development; creative destruction; R&D intensity; entrepreneurship; intellectual property rights.;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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