Innovation and volatility of the GDP growth rate: case of the economies of sub-Saharan Africa

Abstract

The objective of this research is to assess the impact of innovation on the volatility of GDP growth rate in the economies of Sub —Saharan African (SSA) countries. Using a dynamic panel model, a volatility index that we built and an innovation index produced by United Nations Industrial Development Organization (UNIDO), we show that innovation reduces the volatility of growth rates of GDP. In other words, the likelihood to control the volatility of GDP growth rate is an increasing function of innovation. There is a threshold effect of innovation effect on volatility depending to GDP per capita. Indeed, innovation reduces volatility but until a certain level of GDP per capita. This threshold is estimated at US $ 671 with a confidence level of 90% equal to US $ 600 - US $ 740. The effect of innovation on volatility is more efficient in a politically stable environment. Local innovation and innovation imported (foreign direct investment) have different behavior. The first reduces volatility while the second increases it.

The role of value added across economic sectors in modulating the effects of FDI on TFP and economic growth dynamics

“…, 2017); foreign direct investment (FDI) drivers in SSA and Middle East and North African countries (Okafor et al. , 2017); innovation and economic growth volatility (Yaya and Cabral, 2017); financial development and economic growth volatility (Ibrahim and Alagidede, 2017).…”

“…(2) Recent papers on economic growth have focused on country-specific evidence on inflation and output dynamics (Bonga-Bonga and Simo-Kengne, 2018); nexuses between financial development and economic growth (Adam et al, 2017;Assefa and Mollick, 2017); linkages between aid, aid volatility and sector growth (Kumi et al, 2017); foreign direct investment (FDI) drivers in SSA and Middle East and North African countries (Okafor et al, 2017); innovation and economic growth volatility (Yaya and Cabral, 2017); financial development and economic growth volatility (Ibrahim and Alagidede, 2017).…”

Resource Rents and Economic Growth: Governance and Infrastructure Thresholds

“…The positioning of the above study departs from contemporary economic growth literature which has largely focused on inter alia: the importance of information technology in economic growth (Vu, 2019;Asongu & Odhiambo, 2020a); nexuses between financial development and economic growth (Adam et al, 2017;Assefa & Mollick, 2017); dynamic linkages between economic output and inflation (Bonga-Bonga & Simo-Kengne, 2018); the connection between economic growth volatility and financial development (Muazu & Alagidede, 2017); relationships between aid, aid volatility and sectoral growth (Kumi et al, 2017); thresholds of insurance penetration for economic growth (Asongu & Odhiambo, 2020b); the relationship between innovation and volatility in economic growth (Yaya & Cabral, 2017) and dynamics of government expenditure in economic growth (Onifade et al, 2020) 2 .…”

The Non-Linear Effects of Fixed Broadband on Economic Growth in Africa

“…Third, the positioning of this research, as articulated in the previous paragraph, is also motivated by a gap in the existing literature. Accordingly, the extant literature on economic growth in Africa has focused on the following strands, for the most part: assessing determinants of external flows (Okafor, Piesse & Webster, 2017), investigating nexuses between financial access and economic prosperity (Adam, Musah & Ibrahim, 2017;Assefa & Mollick, 2017); understanding country-centric cases related to economic output and inflation (Bonga-Bonga & Simo-Kengne, 2018); linkages between foreign aid, volatility, and growth that are sector-specific (Kumi, Ibrahim & Yeboah, 2017); nexuses between variations in economic prosperity and access to finance (Ibrahim & Alagidede, 2017) and connections between innovation and economic growth variation (Yaya & Cabral, 2017).…”