High-Tech Exports and Governance Institutions

There exists substantial evidence that technological innovation and, more specifically, innovation creating high-tech exports is a crucial driver for economic growth. However, there is less consensus about the factors that cause high-tech exports to thrive. Most studies emphasize the crucial role played by research and development expenditures, foreign direct investments, trade openness, human capital, and patents. In this article, we instead examine the role of a different determinant, which usually is overlooked in the scholarly debate about governance institutions. We use government effectives (GE) and rule of law (ROL) as measures of governance. We employ a panel-data approach encompassing more than 100 countries between 2007 and 2019. The panel estimates show a causal relationship linking GE and the ROL with high-tech exports.