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Ting Xu – Darden – Brown Bag Series
14 October 2019 @ 1:30 pm - 2:30 pm
Bo Bian, Jean-Marie Meier, and Ting Xu
October 11, 2019
We study how innovation goes global in response to the establishment of strong international legal institutions that reduce cross-border contracting frictions. We construct novel measures of the globalization of innovation at the country-pair level using 70 million patents from more than 100 patent oﬃces. Exploiting the staggered signing of Bilateral Investment Treaties (BITs), we ﬁnd that stronger international legal institutions increase a country’s technology adoption and sourcing from its BIT partner country and the R&D collaborations between them, resulting in the convergence of the directions of their innovations. The results are particularly strong for countries with weak domestic institutions, for technological laggards, and for process innovation. Increases in the mobility of ﬁnancial and human capital appear to be the key mechanisms.