Financial globalization and technological innovation: International evidence |
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| Affiliation: | 1. School of Economics and Management, Chang’an University, Xi’an, Shaanxi, China;2. School of Economics and Finance, Xi’an Jiaotong University, Shaanxi, China;3. Business School, Zhengzhou University, China;4. Department of Marketing Management, Shih Chien University, Kaohsiung, Taiwan;1. School of Public Administration, Southwestern University of Finance and Economics, Chengdu, China;2. IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France;3. School of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu, China;4. College of Arts and Science, The Ohio State University, Columbus, United States;1. Department of Quantitative Economics, School of Economics and Business, University of Sarajevo, Sarajevo, Bosnia and Herzegovina;2. World Bank, Washington DC, United States;1. Department of Economics, University of Siegen, 57068 Siegen, Germany;2. CESifo, München, Germany |
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| Abstract: | Country’s technology progress and innovation development not only depends on internal knowledge stock and human capital, but also external financial resources. This paper explores the effect of financial globalization on technological innovation through empirical investigations by using the system generalized method of moment method and panel data from 110 countries over the period of 1985–2015. Our empirical results suggest that financial globalization exerts a significant enhancing effect on technological innovation and this effect becomes stronger for countries with better institution quality. A one unit change of financial globalization can bring about a 0.6 % increase in patent applications. The comprehensive evidence shows that financial development, not trade integration, is the main channel through which financial globalization promotes national innovation. Subsample analysis shows that financial globalization only promotes innovation development of Non- Organization for Economic Co-operation and Development (OECD) countries. Our findings offer new insights into the influence of financial openness on technology progress. |
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| Keywords: | Financial Globalization Innovation Financial Development Institution Quality |
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