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Innovation and Financial Globalisation

Philip R. Lane IIIS, Trinity College Dublin and CEPR

This paper examines the links between international financial integration and the level of innovation activity. If financial globalisation boosts innovation, this helps to explain the empirical evidence that indicates that increased financial integration conditionally raises the level of productivity and long-run living standards. Our analysis finds that, conditional on the level of development, more integrated economies do exhibit higher levels of innovation activity but that the impact differs across equity-type and debt-type dimensions of international financial integration. Moreover, the gains from equity-type integration kick in at relatively low income levels, whereas the gains from debt-type integration are only found for high-income countries.


Last updated 28 August 2014 by IIIS (Email).