Does innovation policy attract international competition? Evidence from energy storage

Though existing studies suggest that innovation-promoting public policies are associated with an increase in the number of inventions generated, these studies do not explore the geographic origin of such inventions. Though domestic policies aimed at developing innovation capabilities in a particular technological area may result in more innovation, such policies may also 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 the latter will result in relatively more technology transfer into a given country from abroad. Using international panel data on the patenting of energy storage technologies, we explore the impact of these two policy types on domestic innovation and the inward transfer of foreign-invented technologies. 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.