| This dissertation is composed of two parts. In the first part, the purpose is to explain what drives the Venture Capital investment in a particular area. The existing literature usually addresses this question by using cross country data. In contrast, I use as the geographic unit US regions. The advantage of this approach is that it holds fixed many of the determinants of VC investment identified in the cross country studies such as volume of IPOs, stock market capitalization and accounting standards. Therefore, it is possible to better measure the influence of the availability of new ideas, in particular, the role of academic research. The results indicate that the most important variable to explain the variability of VC investment in the US regions is the quality of academic production measured by the total citation of papers. The results are robust to the exclusion of the areas with largest presence of VC (Boston and San Francisco). In the second part, a paper coauthored with my advisor Luigi Zingales, the objective is to test the proposition that VC investment have a significant positive impact on innovations and on the creation of new businesses. The central problem is to disentangle the effect of the exogenous component of the VC investment on the number of patents and on the number of new companies using those patents. We address these problems in two ways. First, to control for omitted factors related to the supply of high-tech ideas we use the production of academic papers in different scientific areas in different US regions. Second, we use the assets of pension funds in a region to instrument the VC variable. The results suggest that VC investment has a significant positive effect on both patents and the creation of new businesses. |
