How governance quality matters for innovation in low income and lower middle income economies

This study examines how six distinct dimensions of governance are associated with innovation performance in low-income and lower-middle-income economies. The analysis uses panel data for 34 economies from 2011 to 2023 and combines the Global Innovation Index and its output pillars with the Worldwide Governance Indicators and macroeconomic controls. Government effectiveness, regulatory quality, and rule of law display the most consistent positive associations with the overall Global Innovation Index. Voice and accountability and political stability are not statistically significant in the baseline overall-index models but are positively associated with knowledge and technology outputs. Control of corruption is sensitive to the covariance estimator and is not robust under wild cluster bootstrap inference. The results refine the general proposition that institutions matter by identifying administrative capacity, regulatory coherence, and legal reliability as the governance functions most closely associated with innovation performance in resource-constrained economies.