Legal origins and innovation: Global evidence

This paper presents cross-country evidence on whether and how legal origins affect technical innovation. Using panel data on 120 countries between 1996 and 2019 and the Least Square Dummy Variable (LSDV) approach, we find that common law countries generally perform better in both technology innovation inputs and outputs than their civil law counterparts. Interestingly, we further present that French civil law countries exhibit the worst innovative performance, whereas German and Scandinavian civil law countries might even exceed common law countries in technical innovation. At least, there is no solid evidence to show that common law countries outperform German and Scandinavian civil law countries in technical innovation. Our findings further show that legal origins affect technical innovation via the political channel and the adaptation channel, and that legal origins’ actual role in technical innovation correlates with their impacts on financial development and private property protection. Our study offers new insight into legal origins’ economic consequences.