Political decentralization and technological innovation: testing the innovative advantages of decentralized states

Although never rigorously tested, it has become a sort of accepted wisdom amongst social scientists that government decentralization offers key advantages for innovators. Decentralized governments are widely seen as agile, competitive, and well structured to adapt to innovation’s gale of creative destruction. Meanwhile, centralized states, even when democratic, have come to be viewed as rigid and thus hostile to the risks, costs, and change associated with new technology; or are subject to capture by status-quo interest groups which use their influence to promote policies which ultimately restrict technological change. Therefore decentralized government is often perceived as a necessary institutional foundation for encouraging long-run technological innovation. In the following article, this wisdom is tested using data on international patent activity, scientific publications, and high-technology exports. The results suggest that the supposed technological advantages of decentralized states are a fiction, and that international pressures may be more important.