Does democracy cause innovation? An empirical test of the popper hypothesis

• Published in: Research policy Vol. 46; no. 7; pp. 1272 - 1283
• Main Authors: Gao, Yanyan, Zang, Leizhen, Roth, Antoine, Wang, Puqu
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.09.2017
• Subjects: Democracy; DID method; Innovation; Patent data; DID method; P00; Innovation; Patent data; O38; F55; Democracy; N20; P51
• ISSN: 0048-7333; 1873-7625
• DOI: 10.1016/j.respol.2017.05.014

•Popper’s hypothesis is empirically tested using worldwide panel data.•Different methods are employed to test the causality link between democracy and innovation.•Popper’s hypothesis is not supported by the empirical results.•The results are robust to various innovation measurements and model specifications. Democratic countries produce higher levels of innovation than autocratic ones, but does democratization itself lead to innovation growth either in the short or in 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 contribute 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. The results from the difference-in-differences method show that democracy itself has no direct positive effect on innovation measured with patent counts, patent citations and patent originality.