Innovation during Oil Price Booms: Modelling the effects of oil price changes on innovation in oil & gas abundant countries

Abstract

This paper investigates whether oil price booms have an effect on innovation in countries with abundant oil & gas reserves. To quantify innovation within all sectors of a country objectively, patent data is used. Using a linear regression, it is shown that patent applications decrease during times of increasing oil prices in comparison to countries without oil & gas reserves. Country and year fixed effects are included. The observed negative effect remains present after various robustness checks. The mechanisms leading to these results are expected to be crowding out effects at the individual, business and governmental level.