Does Innovation Policy Attract International Competition? Evidence from Energy Storage

Though existing studies suggest that innovation-promoting public policies are associated with increases in the number of inventions generated, these studies do not explore the geographic origin of such inventions. Do domestic policies aimed at developing innovation capabilities in a particular technological area result in greater domestic competitiveness, or do they instead invite more competition from technologies developed abroad? In this paper, we describe the impact of two categories of innovation-supporting policies: those focused on the supply of a given set of technologies, and those focused on the demand for products based on these technologies. We argue that demand-pull policies will result in more technology transfer into a given country from abroad, relative to supply-push policies. We test this prediction using panel data on the international transfer of patented energy storage technologies between country-pairs. Our results indicate that the transfer of such technologies into a given country increased significantly after demand-pull policies were put into place, but the same pattern does not hold for supply-push policies. Demand policies attract the most inward technology transfer when the policy-passing country is a large market and lacks substantial domestic energy storage technology development