Nexus between Innovation and Economic Growth in Ethiopia
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Date
2018-06
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Addis Ababa University
Abstract
The relationship between innovation and economic growth has been one of the contended subjects by scholars in the field. Conventional economic growth theory among many of it is draw backs assumes innovation as exogenous. Hence, following the emergence of new growth theory in the 80th and the era of information technology has put the validity of conventional model into question. The increased globalization has forced developing countries to make an emphasis to alleviate part of the ill of the economy to innovation. The Ethiopian economy has registered an impressive economic growth in the last few years. The Growth and Transformation plan progress report indicate the GDP rate is rapid, in broad-based and well above the average growth rate of other Sub-Saharan African countries. Thus, the study puts innovation into the perspective aims to empirically examine the relationship to economic growth using Patent, R&D and imported capital goods during the period of 1996 to 2017. The study employed ARDL multiple regression model and pairwise Granger casuality test technique for estimation. The estimated result show patent has a negative significant impact on both short and long term indicating rampant imitation in the economy. Furthermore, the unidirectional casuality that goes form growth to patent confirms the level of economic development is essential for strong IPR regime. R&D on the other hand has a positive significant impact on economic growth both in short and long term the unidirectional casuality that goes form growth to R&D indicate economic growth is causing the R&D investment. Lastly, imported capital goods have positive insignificant association on economic growth and the pairwise casuality unlike the previous variables has a unidirectional relationship that emerges from imported capital goods to growth. The study implies a major policy implication arising from the results is that innovation has a significant impact on the economic growth of the country during the study period and fundamental to the realization of sustained economic growth in Ethiopia.
Description
A Thesis submitted to College of Business and Economics of Addis Ababa University in partial fulfillment of the requirement for award of the degree of Master Science in Management Program
Keywords
Economic growth, Innovation, Gross Domestic Product