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The Effects of Financial Openness on Innovation: An Empirical Study

Cederholm, Henrik LU and Zhong, Patrik (2017) NEKH02 20171
Department of Economics
Abstract
Using data from 33 OECD countries for the years 1980-2014, we estimate the effects of financial openness on innovation through the use of fixed effects panel data regression. After establishing innovation as a core factor in technological growth, we derive, with the help of Schumpeterian models of growth, an argument that the financial system has a significant role in the development of innovations. The development of a country’s financial system should therefore lead to an increase in innovation. One particular way to increase the efficiency and competitiveness of the financial system could be to open the borders to the international financial community, which would allow for international transactions and increase the efficiency of the... (More)
Using data from 33 OECD countries for the years 1980-2014, we estimate the effects of financial openness on innovation through the use of fixed effects panel data regression. After establishing innovation as a core factor in technological growth, we derive, with the help of Schumpeterian models of growth, an argument that the financial system has a significant role in the development of innovations. The development of a country’s financial system should therefore lead to an increase in innovation. One particular way to increase the efficiency and competitiveness of the financial system could be to open the borders to the international financial community, which would allow for international transactions and increase the efficiency of the financial system. By using patents as a measurement for innovation and the Chinn-Ito Index for financial openness we run a regression which confirms our theory that openness indeed has an effect on innovations in a country. (Less)
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author
Cederholm, Henrik LU and Zhong, Patrik
supervisor
organization
course
NEKH02 20171
year
type
M2 - Bachelor Degree
subject
keywords
financial openness, financial development, innovation, technological growth, economic growth, patents, Chinn-Ito
language
English
id
8910142
date added to LUP
2017-07-11 11:39:08
date last changed
2017-07-11 11:39:08
@misc{8910142,
  abstract     = {Using data from 33 OECD countries for the years 1980-2014, we estimate the effects of financial openness on innovation through the use of fixed effects panel data regression. After establishing innovation as a core factor in technological growth, we derive, with the help of Schumpeterian models of growth, an argument that the financial system has a significant role in the development of innovations. The development of a country’s financial system should therefore lead to an increase in innovation. One particular way to increase the efficiency and competitiveness of the financial system could be to open the borders to the international financial community, which would allow for international transactions and increase the efficiency of the financial system. By using patents as a measurement for innovation and the Chinn-Ito Index for financial openness we run a regression which confirms our theory that openness indeed has an effect on innovations in a country.},
  author       = {Cederholm, Henrik and Zhong, Patrik},
  keyword      = {financial openness,financial development,innovation,technological growth,economic growth,patents,Chinn-Ito},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Effects of Financial Openness on Innovation: An Empirical Study},
  year         = {2017},
}