Does Democracy Cause Innovation? An Empirical Test of the Popper Hypothesis

June 09, 2017 by Yanyan Gao, Leizhen Zang, Antoine Roth, Puqu Wang

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Democractic countries produce higher levels of innovation than autocratic ones, but does democratization itself lead to innovation growth either in the short or the long run? The existing literature has extensively examined the relationship between democracy and growth but seldom explored the effect of democracy on innovation, which might be an important channel through which democracy contributes to economic growth. This article aims to fill this gap and continue to the long-standing debate on the relationship between democracy and innovation by offering empirical evidence based on a data set covering 156 countries between 1964 and 2010. This results from the differences-in-differences method show that democracy itself has no direct positive effect on innovation measured with patent counts, patent citations and patent originality.