Ethnolinguistic diversity, quality of local public institutions, and firm-level innovation

Focacci, Chiara Natalie (author), Kovač, Mitja (author), Spruk, Rok (author)

Institutional quality is crucial for innovation and economic growth. In this article, we exploit historical linguistic differences across Slovenian municipalities between the Italian, German, and Slovenian-speaking population prior to World War 1, as a plausible exogenous source of variation in firm-level innovation to estimate the effect of institutional quality on innovation. Employing a set of limited dependent variable and instrumental variable models, we show that greater historical exposure to multilingualism is associated with markedly better quality of government and provision of public goods, more impartial local government administration, and lower prevalence of corruption, which in turn predicts systematically more vibrant economic activity, greater economic complexity, and higher rates of firm-level innovation at the local level. The estimated effects are robust to a variety of specification checks and do not appear to be sensitive to the choice of ethnic and linguistic diversity measures.

• Language: English
• Keywords: enterprises, economic history, innovations, productivity, corruption, firms, institutions
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2023
• Number of pages: 22 str.
• Numbering: Vol. 75, art. 106155
• PID: 20.500.12556/RUL-152980
• UDC: 346
• ISSN on article: 0144-8188
• DOI: 10.1016/j.irle.2023.106155
• COBISS.SI-ID: 159498755
• Publication date in RUL: 13.12.2023

Record is a part of a journal

• Title: International review of law & economics
• Shortened title: Int. rev. law econ.
• Publisher: Elsevier
• ISSN: 0144-8188
• COBISS.SI-ID: 560668

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: podjetje, ekonomska zgodovina, inovacije, produktivnost, korupcija