Does institutional quality drive innovation? Evidence from system-GMM estimates

This paper investigates the influence of institutional quality on innovation performance in developing countries by employing annual data from 1997-2014. The system-generalized method of moments (GMM) is used as the empirical method. Estimation results reveal that bureaucratic quality, government stability, democratic accountability, and law and order indicators that represent institutional quality have had a positive influence on innovation performance. These results indicate that improving the institutional structure in the developing countries would have a significant contribution to the innovation process and hence economic development