From R&D to Innovation and Economic Growth: An Empirical-Based Analysis from Top Five Most Innovative Countries of the World

Abstract

This study aims to explore the relationship between research and development, innovation and economic growth of most innovative countries of the world, where innovation and economic growth are dependent variables and R&D, skills, technological innovation and economic structure are the independent variables. The data analysis is conducted using GMM dynamic panel estimations for finding the relationships among variable of the study for the period of 1990–2016 of the top five most innovative countries of the world. The findings of this study show that larger spending in research and developments, more skilled labour, the efficient economic structure of a country having more employment in industry and services sectors, a rapid increase in the technological innovation are the key factors that boost the innovation and economic growth of these countries. The existence of the strength of the relationship is however contingent country-specific socio-economic characteristics, which affect overall capacity of the country to transform research and development investments into innovation and ultimately into the economic growth of a country. The findings of this study are helpful for other countries which are on the way of innovation. The factors identified by this study are very helpful for governments, researchers and policymakers to pay attention to it for the purpose of creating a country innovative and eventually boosting the economic growth of a country.