How the Quality of Institutions Affects Technological Deepening in Developing Countries

This paper assesses the effect of institutional quality on research and development (R&D) expenditures in developing countries. The paper finds that the risk of expropriation and the rule of law are correlated with R&D expenditures. Since b...

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Main Author:	Clarke, George R.G.
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	BASIC RESEARCH CAPITAL FORMATION CAPITAL GOODS CAPITAL MARKETS CENTRAL BANK COMPARATIVE ADVANTAGE DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH ECONOMETRICS ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS EXCHANGE RATE EXPENDITURES EXPORTS EXPROPRIATION EXTERNALITIES FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT GDP GOVERNMENT EXPENDITURES HUMAN CAPITAL IMPORTS INCOME LDCS LICENSING MACHINERY MACROECONOMIC STABILITY METHODOLOGY OVERVALUATION PATENTS PER CAPITA INCOME PRIVATE PROPERTY PRODUCTIVITY PROPERTY RIGHTS R&D R&D EXPENDITURES RESEARCH INSTITUTES RESEARCH LABORATORIES RESEARCH METHODOLOGIES SCIENTIFIC RESEARCH TECHNIQUES TECHNOLOGICAL PROGRESS TRANSITION ECONOMIES
Online Access:	http://documents.worldbank.org/curated/en/2001/04/2873559/quality-institutions-affects-technological-deepening-developing-countries http://hdl.handle.net/10986/19670

id	okr-10986-19670
recordtype	oai_dc
spelling	okr-10986-196702021-04-23T14:03:43Z How the Quality of Institutions Affects Technological Deepening in Developing Countries Clarke, George R.G. BASIC RESEARCH CAPITAL FORMATION CAPITAL GOODS CAPITAL MARKETS CENTRAL BANK COMPARATIVE ADVANTAGE DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH ECONOMETRICS ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS EXCHANGE RATE EXPENDITURES EXPORTS EXPROPRIATION EXTERNALITIES FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT GDP GOVERNMENT EXPENDITURES HUMAN CAPITAL IMPORTS INCOME LDCS LICENSING MACHINERY MACROECONOMIC STABILITY METHODOLOGY OVERVALUATION PATENTS PER CAPITA INCOME PRIVATE PROPERTY PRODUCTIVITY PROPERTY RIGHTS R&D R&D EXPENDITURES RESEARCH INSTITUTES RESEARCH LABORATORIES RESEARCH METHODOLOGIES SCIENTIFIC RESEARCH TECHNIQUES TECHNOLOGICAL PROGRESS TRANSITION ECONOMIES This paper assesses the effect of institutional quality on research and development (R&D) expenditures in developing countries. The paper finds that the risk of expropriation and the rule of law are correlated with R&D expenditures. Since both institutional variables increase as institutional quality improves (i.e., as risk of expropriation decreases and rule of law improves), this suggests that stronger institutions encourage greater R&D expenditures. The result for the risk of expropriation is more highly significant and far more robust than the result for the 'rule of law'. Although R&D is not the primary way that developing countries gain access to technology, this result is interesting for at least two reasons. First, R&D might encourage technological deepening better than other methods that developing countries use to gain access to technology (e.g., through foreign direct investment (FDI) or capital goods imports). Second, past work has shown that another important way that developing countries gain access to technology, through FDI, is also positively correlated with institutional quality (i.e., as institutional quality improves, FDI increases). 2014-08-26T15:18:06Z 2014-08-26T15:18:06Z 2001-04 http://documents.worldbank.org/curated/en/2001/04/2873559/quality-institutions-affects-technological-deepening-developing-countries http://hdl.handle.net/10986/19670 English en_US Policy Research Working Paper;No. 2603 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	BASIC RESEARCH CAPITAL FORMATION CAPITAL GOODS CAPITAL MARKETS CENTRAL BANK COMPARATIVE ADVANTAGE DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH ECONOMETRICS ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS EXCHANGE RATE EXPENDITURES EXPORTS EXPROPRIATION EXTERNALITIES FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT GDP GOVERNMENT EXPENDITURES HUMAN CAPITAL IMPORTS INCOME LDCS LICENSING MACHINERY MACROECONOMIC STABILITY METHODOLOGY OVERVALUATION PATENTS PER CAPITA INCOME PRIVATE PROPERTY PRODUCTIVITY PROPERTY RIGHTS R&D R&D EXPENDITURES RESEARCH INSTITUTES RESEARCH LABORATORIES RESEARCH METHODOLOGIES SCIENTIFIC RESEARCH TECHNIQUES TECHNOLOGICAL PROGRESS TRANSITION ECONOMIES
spellingShingle	BASIC RESEARCH CAPITAL FORMATION CAPITAL GOODS CAPITAL MARKETS CENTRAL BANK COMPARATIVE ADVANTAGE DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH ECONOMETRICS ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL ANALYSIS EXCHANGE RATE EXPENDITURES EXPORTS EXPROPRIATION EXTERNALITIES FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT GDP GOVERNMENT EXPENDITURES HUMAN CAPITAL IMPORTS INCOME LDCS LICENSING MACHINERY MACROECONOMIC STABILITY METHODOLOGY OVERVALUATION PATENTS PER CAPITA INCOME PRIVATE PROPERTY PRODUCTIVITY PROPERTY RIGHTS R&D R&D EXPENDITURES RESEARCH INSTITUTES RESEARCH LABORATORIES RESEARCH METHODOLOGIES SCIENTIFIC RESEARCH TECHNIQUES TECHNOLOGICAL PROGRESS TRANSITION ECONOMIES Clarke, George R.G. How the Quality of Institutions Affects Technological Deepening in Developing Countries
relation	Policy Research Working Paper;No. 2603
description	This paper assesses the effect of institutional quality on research and development (R&D) expenditures in developing countries. The paper finds that the risk of expropriation and the rule of law are correlated with R&D expenditures. Since both institutional variables increase as institutional quality improves (i.e., as risk of expropriation decreases and rule of law improves), this suggests that stronger institutions encourage greater R&D expenditures. The result for the risk of expropriation is more highly significant and far more robust than the result for the 'rule of law'. Although R&D is not the primary way that developing countries gain access to technology, this result is interesting for at least two reasons. First, R&D might encourage technological deepening better than other methods that developing countries use to gain access to technology (e.g., through foreign direct investment (FDI) or capital goods imports). Second, past work has shown that another important way that developing countries gain access to technology, through FDI, is also positively correlated with institutional quality (i.e., as institutional quality improves, FDI increases).
format	Publications & Research :: Policy Research Working Paper
author	Clarke, George R.G.
author_facet	Clarke, George R.G.
author_sort	Clarke, George R.G.
title	How the Quality of Institutions Affects Technological Deepening in Developing Countries
title_short	How the Quality of Institutions Affects Technological Deepening in Developing Countries
title_full	How the Quality of Institutions Affects Technological Deepening in Developing Countries
title_fullStr	How the Quality of Institutions Affects Technological Deepening in Developing Countries
title_full_unstemmed	How the Quality of Institutions Affects Technological Deepening in Developing Countries
title_sort	how the quality of institutions affects technological deepening in developing countries
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2001/04/2873559/quality-institutions-affects-technological-deepening-developing-countries http://hdl.handle.net/10986/19670
_version_	1764440202013573120

How the Quality of Institutions Affects Technological Deepening in Developing Countries

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