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  • Writer's pictureDevasmita Jena

Can domestic institutions affect exports and innovation?

Exports drive innovation. But, do country-specific institutions have any role to play in strengthening the export-innovation linkage? A study by Achinthya Koswatta finds that the quality of institutions such as legal environment and property rights, political stability, investment and production related institutions, control of corruption, and voice, freedom and accountability determine the relationship between manufacturing sector exports and innovation in developing countries. Poor quality institutions disrupt the export-innovation linkage. Of the five institutional qualities considered, the author finds that the three matter the most. Absence of high-quality legal institutions, political stability and investment and production facilitation disrupts developing countries' connectedness to competitive global markets. This in turn, stymies the possibility of innovative exports.


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