Effects of Sub-National Political Institutions on Localized Innovation: Evidence From United States Counties

This study investigates the influence of political institutions on innovation at the sub-national level in the United States, an area less explored compared to national contexts. It examines how political affiliations impact innovation support and outcomes, which are crucial indicators of economic development. The analysis focuses on county-level political affiliation, calculated as the mean percentage of Democratic versus Republican votes across five presidential elections. Data from over 94% of US counties were analyzed using hierarchical linear regression. The study evaluates the relationship between political affiliation and four measures of innovation, including support factors like venture capital and business incubators, as well as outcomes such as patents and initial public offerings. The findings indicate that counties leaning Democratic create a more favorable political environment for innovation. These results underscore the significant role of political institutions in fostering innovative business activities at the sub-national level, providing insights for policymakers and stakeholders aiming to enhance local economic growth.