An Empirical Study Of Institutional Arrangements On Technological Change

In recent years, due to the development of endogenous economic growth theory, technological progress is believed to be the key determinant factor of economic growth, thus, promoting technological progress has become an important effort for a government to promote the economic and social development. However, there is a common misconception for how to effectively promote technological progress, many people think that as long as there is government’s plan and leadership attention, as long as there are plenty of government funds and scientific research personnel, can promote the progress of technology and development of high-tech industry. However, the results often goes to the opposite, and don’t achieve the expected results. From the national technical development process, there is a big difference in technology level between different countries and regions, many scholars studies this phenomenon from the aspects of human capital, R&D investment and international technology diffusion, but many of them either neglected institutional factors or just do an qualitative analysis, so they can’t give a compelling explanation. Based on the theory of new institutional economics, this paper tries to do a theory and empirical study for technical progress and institutional arrangements.New institutional economics theory considers institutional factor is a determinant factor for technological progress. As a rule of regulating behavior of human, it has obvious norms, constraints, and incentive effect, technological progress as a result of human behavior, its produces, development trend and efficiency of technological progress are not random, but will be affected by the institutional arrangements, institutional arrangements influenced through agent’s behavior choice, improve the efficiency of resource allocation and eventually result in technological progress. A good set of effective institution arrangements will inspire people to explore technology activities and working enthusiasm and a bad institution system will restrain behavior of technology innovation, block technological progress. In order to test the influence of institutional arrangements to technological progress, an empirical study of consider the influence of institutional arrangement to two approaches of technological progress (technical innovation and interational technology spillover) respectively.First, the paper integrates the institutional factor into the analysis frame which is include technological innovation determining factor, and inferred the negative binomial model which is include institution factors, then, using26cross-country’s data, an empirical study is conducted to investigate what relationship between institution and technology innovation. The findings indicated that among the considered institutions, intellectual property rights; degree of marketization; integrity of the legal system and degree of private property protection has obviously positive effects on technology innovation respectively, and intellectual property rights has an inverted U-shaped relationship between technology innovation activity, which means that country’s intellectual property rights protection is not stricter is more advantageous to the technological innovation, intellectual property protection degree after certain limit dgree, the severer intellectual property protection will hinder technological innovation, but before this degree, more technological innovations will be stimulated with the raise of intellectual property protection strengthen. Afterward, other institutional arrangements respectively is the market economization degree, the legal norm degree, the private property right protection and the international trade free degree; The relative weaker influence of institution factor is the foreign capital policy, the customs policy. Then the paper further inspected the institution arrangements affecting the technological innovation investment, using a sample data of29countries for period1981-2006, the empirica result indicated that market economization degree, intellectual property protection, free trade degree and private property right protection and so on also have a similar influence to R&D investment.Secondly, the influence of institution arrangements to international technology spillover is studied in this paper. In an open economy, international technology spillover is an important information source of technical knowledge for a country’s technological progress; it has an important promotion to a country’s technological progress. There are mainly three forms of International technology spillovers, i.e. disembodied spillover; international trade spillover and FDI spillover which is called embodied spillover. Based on the model of Coe and Helpman, and using panel data of global60countries for pieriodl981-2006, an empirical study is conducted to inspect what will be affected to international trade technological spillover by intellectual property protection, business environment, marketing economic system. Then take a similar methodology, with a sample data of33countries for period1980-2005every five years, the influence of institution arrangements to FDI technology spillovers has also been studied. In both cases mentioned above, the results suggest that the institution arrangements have an important effect for international trade and FDI technology spillover to the host country. Further analysis revealed that, compared to countries with lower quality of institution, countries with higher quality has more technology spillover.Then, the influence of institution arrangements to disembodied technology spillovers is investigated. Using International patent application as an alternative for disembodied spillover, with panel data of36countries for1975-2005every5-year interval, the paper inspect the effect of such institution as patent protection, private property protection, trade facilitation, and so on. The empirical results show that the improvements of these institutional factors will help a country to attract more inflow of international patent applications, that is to say, a country’s institutional arrangements improving will increase disembodied technology spillovers which is also important to technology progress.