Impact of innovations on GDP dynamics

Authors:
V. Goliuk1
1. National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute” (Kyiv, Ukraine)
Section:
Innovative Management
Pages:
151 - 159
Language:
English
DOI:
10.21272/mmi.2017.2-14


Annotation

The aim of this paper is to study the impact of innovations on GDP dynamics in 30 countries of different level of development. The study is concerned to analyze the correlation between GDP growth dynamics and innovation variables and to determine the innovation factors affecting GDP growth dynamics more than other variables.

The results of the study. The findings provide evidence that the relationship between GDP dynamics and selected variables varies significantly across the countries. The highest level of correlation has been indicated between the GDP dynamics and the following innovation variables: trademark applications, patent applications, high-technology exports, information and communication technology (ICT) and goods imports. The findings provide evidence of positive relationship between GDP growth and ICT goods imports that leads to the assumption that the implementation of innovation technologies contributes economic growth. However, the correlation could also mean that high GDP growth rate gives the countries the financial possibility to increase expensive import of high-technology goods. Causal relationship between these variables needs additional tests. Within the post-socialist group the negative sign of correlation of these variables happens (in Check Republic, Poland and Spain), however the level of the relationship in these cases is not high.

The magnitude and sigh of correlation coefficient between GDP and trademark and patent applications vary significantly across the countries. While trademark applications correlate with GDP growth dynamics mostly positive (except Austria, Switzerland, Italy, Korea, Luxemburg, Norway and Ukraine), correlation of patent applied by nonresidents and GDP is mostly positive, and correlation of patent applied by residents and GDP varies across the countries. However, in EU-countries correlation is mostly positive, while non-European counties have mostly negative correlation of these variables.

Analyzing the association between GDP growth dynamics and export of communications, computer and other service it should be admitted that positive sign of correlation is observed only in Korean economy. In other countries, correlation is negative that means low (if any) role of communications, computer and other services in economic growth of these countries. Role of innovations in electricity production and energy consumption (presented in the research by renewable electricity output and renewable energy consumption) is limited. Only in Norway, correlation between GDP growth and these variables is positive. The results of the study show that there is the negative association between GDP growth and research and development expenditures of developed countries. Analyzing the relationship between GDP growth dynamics and innovation variables in Ukraine rather weak association of innovations and economic development can be observed in most cases. That leads us to the conclusion concerning low impact of innovations on economic development of Ukraine. The following measures of innovation policy to be taken by Ukrainian authorities to drive economic growth were suggested: 

- designing and implementing institutional changes to support technical learning and innovation;

- government support to private sector R&D including R&D subsidies and R&D tax incentives;

- encouraging information and technology communication;

- government support to the knowledge-based industries and services;

- state promotion of innovation and technology transfer from scientific to industrial sector of Ukrainian economy;

- import of modern technologies, foreign direct investment promotion;

- improvement of foreign technologies using national R&D capabilities;

- effective intellectual property protection.

Conclusions and directions for further research. The study has showed that the strength and the sign of the association of innovation variables with GDP dynamics vary across the countries. Novelty of the paper lies in the following:

- analysis of correlation between innovations and GDP dynamics in 30 countries of different level of development is the sequel of the previous studies focused on the relationship between innovations and economic growth;

- negative association between GDP dynamics and R&D expenditures of developed countries was revealed that leads to the assumption that in the period 2000-2014 R&D expenditures were not the key driver of economic growth in these countries;

- on the basis of technologically advanced countries’ experience certain measures of innovation policy to be taken by Ukrainian authorities to drive economic growth were suggested.

The following research will be concerned the relationship between GDP growth dynamics and innovation factors using the Granger test to show causal relationship between the variables.


Keywords
impact, correlation, relationship, GDP dynamics, economic growth, innovation


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