A Quantitative Assessment of the Finance–Growth–Innovation Nexus in EEA Countries: Evidence from a Multivariate VECM

How Does Innovation Affect Economic Growth? Evidence from G20 Countries

“…The common flow, however, is the causality from economic growth to innovation, indicating the support of demand-following (D) hypothesis. This causality is consistent with the findings of various earlier studies, namely, Avila-Lopez et al (2019) for the 12 Latin American countries for the period 1996–2015, Mtar and Belazreg (2019) for the 27 OECD countries over the period 2001–2016, Pradhan et al (2019) for the EEA countries over the period 1989–2016, Pradhan et al (2018) for the 49 European countries over the period 1961–2014, Maradana et al (2017) for the 19 European countries over the period 1989–2014, Cetin (2013) for the nine European countries over the period 1981–2008, and Sinha (2008) for Japan and South Korea over the period 1963–2005.…”

“…The importance of innovation in economic development has received much attention in the academic literature, particularly since the seminal work of Schumpeter (1911). There are at least two ways we can justify the contribution of innovation to economic growth: (a) innovation landfills to the discovery of new technology, systems and processes that improve productivity and efficiency within the economy and (b) innovation is very vital for the development of new value-added products and services, backing to new income generation channels (see Geissdoerfer et al, 2018; Grossman & Helpman, 1991; OECD, 2015; Pradhan et al, 2019; Pradhan et al, 2021; Rosenberg, 2004; Solow, 1956; World Bank Group, 2012).…”

“…(a) innovation landfills to the discovery of new technology, systems and processes that improve productivity and efficiency within the economy and (b) innovation is very vital for the development of new value-added products and services, backing to new income generation channels (see Geissdoerfer et al, 2018;Grossman & Helpman, 1991;OECD, 2015;Pradhan et al, 2019;Pradhan et al, 2021;Rosenberg, 2004;Solow, 1956;World Bank Group, 2012).…”