Innovation and economic growth: An empirical analysis for African countries

In recent decades, innovation has become recognized as a key driver of economic growth. This study investigated the relationship between innovation and economic growth in 32 African countries from 2006 to 2017. The linear regression panel corrected standard errors (PCSEs) regression estimation was used to analyze the data. PCSE estimation accounted for heteroskedasticity and possible contemporaneous correlation across panels. The findings showed a positive association between the innovation index and economic growth. This result remained true even when research and development (R&D) expenditure (the conventional measure of innovation) was considered for a handful of countries. This finding highlights the significance of innovation in fostering economic growth. The study also found that domestic investment and human capital encouraged economic growth. The study estimated an endogenous growth model with an alternative measure of innovation. Based on the findings, the study recommends that African countries provide financial and material support for R&D in public and private institutions through funding, imparting entrepreneurial research attitudes in academics, and providing an enabling environment for business enterprises.