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The innovation- growth link in OECD countries: Could other macroeconomic variables matter?

Authors :
Rudra P. Pradhan
Sara E. Bennett
Mak B. Arvin
Sahar Bahmani
Source :
Technology in Society. 51:113-123
Publication Year :
2017
Publisher :
Elsevier BV, 2017.

Abstract

This study investigates the Granger causal relationships between innovation, economic growth, information and communication technology (ICT) infrastructure, government consumption expenditure, gross capital formation, foreign direct investment, and trade openness. Using panel data from 32 high-income OECD countries from 1970 to 2016 and panel cointegration techniques, results show that these variables are cointegrated. The Granger causality tests further confirm that, taking other variables into account, there is bi-directional causality between innovation and economic growth in the long run. Moreover, both economic growth and innovation are generally impacted in the long run by the other variables that we consider. The short-run causality results reveal a diverse pattern of short-run adjustment dynamics among the variables including the possibility of feedback among some of them. Important policy implications for sustainable economic growth and higher innovation suggest elevating government consumption expenditure, increasing capital formation, further opening of countries' economies to trade, as well as improving ICT infrastructure.

Details

ISSN :
0160791X
Volume :
51
Database :
OpenAIRE
Journal :
Technology in Society
Accession number :
edsair.doi...........e24e68a0c031521bb94c14ff5b3f4159
Full Text :
https://doi.org/10.1016/j.techsoc.2017.08.003