Abstract:

Using data from 112 countries from 1998 to 2018, this study quantifies the overall impact of epidemics on innovation and identifies the underlying channels. Our results show that a 1% increase in the severity of an epidemic can significantly lead to a 0.059% decrease in patent applications and a 0.092% decrease in trademark applications. This negative impact can be explained by GDP, population and R&D expenditure channels. Further, our findings indicate that an increase in international personnel exchange (IPE) and foreign direct investment (FDI) can mitigate this negative impact. Finally, we discuss the policy implications of our results.