Innovation and Asian economic growth

Abstract

The Relationship between research and development (R&D) and innovation is an interesting topic and many researchers have given pay attention. According to the existing studies, most researchers will study the relationship between research and development (R&D) and innovation. After that, the researcher will study the impact of innovation on economic growth by separating the study into two topics. However, in real-world research and development, innovation and economic growth tend to occur at the same time. Therefore, this study uses a simultaneous panel quantile regression with the fixed-effect model to analyze the relationships between these three variables at the same time instead of studying them separately. In addition, this research has divided the country into three levels which are low-level income countries, middle-level income countries and high-level income countries. The objective of this research is to examine the relationship between R&D and innovation and study the impact of innovation on economic growth. The data used in this research is annual data from Asian countries. Due to the data limitations, this research selected 26 countries in Asian countries to investigate the model. The selected countries are Armenia, Bangladesh, China, Georgia, Hong Kong, India, Indonesia, Iran, Israel, Japan, Jordan, Kazakhstan, Kyrgyzstan, South Korea, Macau, Malaysia, Mongolia, Pakistan, Philippines, Saudi Arabia, Singapore, Sri Lanka, Taiwan, Thailand, Uzbekistan and Vietnam. The data covers 1996 to 2017. The results show insignificant positive relationships between innovation and economic growth in low-level income countries and show a negative relationship between innovation and economic growth in middle-level income countries and highlevel income countries. This means that innovation alone cannot support or stimulate economic growth. On the other hand, the results show a significant positive relationship between R&D and innovation, which means that R&D expenditure encourages innovation in the case of low-level income countries, middle-level income countries and also high-level income countries. The results of this study are in accordance with the endogenous growth model which can support the results of this study. As technology changes and new inventions lead to innovation.