Civil Freedoms or Political Competition: What Is the Advantage of Democracy for the Development of Technological Innovations?

Abstract

Today most researchers agree that democratic regimes are superior in producing technological innovations to authoritarian regimes, despite the fact that the question of the influence of the type of political regime on economic growth and its most important component, such as innovative activity, remains debatable. At the same time, there are several alternative, although not mutually exclusive, hypotheses about what causes this superiority. One hypothesis suggests institutions that ensure political competition, and above all, competitive elections, are of key importance. According to another hypothesis, the main prerequisite for innovative development lies in the provision for rights and freedoms of citizens. The article attempts to test these hypotheses empirically in order to determine which one of them possesses a greater explanatory power. To perform this task, the author employed a method of multi-level regression, which allows taking into account factors at the level of countries, as well as that of individual firms. The research conducted by the author shows that the presence of competitive elections is not a sufficient condition for innovative development. In contrast, the provision of civil freedoms is a statistically significant predictor. Thus, the liberal aspect of democracy is more important than its electoral aspect for producing technological innovations.