The relationship between finance and innovation is key for economic development. Both classical economists and economic historians highlight the importance of these connections for successful capitalist economies. This paper investigates the relationship between finance and innovation in a cross-country comparison. This comparison uses three sets of data for 187 countries (science and technology, banks and credit and GDP per capita). For 86 countries that produce patents and papers and have banks and stock-exchanges, these data show a strong correlation among these three dimensions. Clustering techniques divide these 86 countries in three subsets, suggesting reciprocal effects between finance and innovation.
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