Feedback effects of economic growth on innovation: a country-level empirical study
Journal of Science and Technology Policy Management
ISSN: 2053-4620
Article publication date: 26 February 2021
Issue publication date: 2 February 2022
Abstract
Purpose
The purpose of this paper is to understand the nature of the feedback effects of economic growth on innovation. The question is whether the economies with higher levels of endowments have a declining feedback effect of income on innovation and contribute to the development of effective innovation policies are raised.
Design/methodology/approach
This study hypothesizes that innovation input’s response to economic growth in terms of income is an inverted “U” shaped path, whereas the innovation output’s response to income is positive and asymptotic. This paper uses the global innovation index data of 154 countries over the period 2013–2017 on innovation and gross domestic product for the analysis using the fixed-effect regression models.
Findings
The results confirmed the inverted U shaped relationship in the line of Kuznets’s curve for innovation input and that of negative slope and asymptotic behaviour for innovation output.
Research limitations/implications
In this study, the analysis performed using the global innovation index 2013–2017 data. This study can be extended at each factor level to understand this phenomenon in depth with more data and to help in improving the innovation policies for the betterment of the economic growth.
Practical implications
This study suggests that developed countries need to guard against complacency in their innovation efforts because of the asymptotic nature exhibited through the effective development of innovation policies. The developing economies can look forward to establishing themselves in the domains of innovation input through imitation of technologies.
Originality/value
This paper extends the study of feedback effects of economic growth on innovation. This study brings out the nature of feedback effects of economic growth on input innovation and output innovation activities. The results show a declining feedback effect of income on innovation in economies with a higher level of endowments and highlight the inclusion of feedback effects of economic activities on the innovation while designing the innovation and economic policies of a country.
Keywords
Acknowledgements
This paper has benefited from several discussions with Dr Rajiv Kishore, Professor and Chair of Management, Entrepreneurship and Technology, the University of Nevada during the conceptualization stage. We gratefully acknowledge his insightful thoughts while developing the paper. We would also like to thank the reviewers for their comments that helped to enhance the quality of the paper.
Citation
Thangavelu, S., Gunasekar, S. and Jyotishi, A. (2022), "Feedback effects of economic growth on innovation: a country-level empirical study", Journal of Science and Technology Policy Management, Vol. 13 No. 1, pp. 22-42. https://doi.org/10.1108/JSTPM-09-2020-0144
Publisher
:Emerald Publishing Limited
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