Nexus Between Technological Innovation and Economic Growth: Evidence From Nigeria (1980-2018)

Abstract

Technological innovation in developing countries is inherently identified with the transfer of technology from the advanced country via trade, FDI and importation of capital and intermediate goods, machinery and other forms of embodied technology (ETC). This is due to low investments in in-house research and development (R&D) activities by local producers, hence, the need for technology transfer and spillover. This study contributes to existing knowledge by examining the empirical short-run and the long-run relationship between technological innovation and economic growth, a case study of Nigeria using the ARDL model on annual time series data spanning from 1980-2018. The f-bound cointegration test shows a long-run relationship among the variables at 5% significant level. Overall, is the results show a positive relationship between innovation in the form of technology transfer and spillover, and economic growth at 5% level of significance. Based on these findings, we propose that technological innovation should be encouraged; however, in-house innovation activities (R&D) should be encouraged due to its peculiarity to the economic structure of the country.