Education, political institutions and innovative activity: A cross-country empirical investigation

Sustained economic growth has been high in the list of priorities of many nations, developed and developing, and the important role of new technology on it has long been recognized in literature. This article examines some factors that affect national innovation activity. The assumption is that innovation grows in the framework of a national system of institutions and organizations. Objective of this article is to empirically examine how the quality of education and of political institutions affects national innovation activity. This article uses a sample of 29 countries and empirically tests the cross-country variation of innovation activity using panel-data methodology. Dependent variable is the number of patents, a proxy for the output of innovation activity, and independent variables are proxies for the quality of education and the quality of governmental institutions. Finally, research and development expenditure is considered as control variable. The findings support the hypothesis that the higher the investment of a society in the quality of education, the higher the output of innovation activity. Furthermore, the development level of the governmental institutions is positively correlated with innovation activity. (c) 2006 Elsevier B.V. All rights reserved.