New Indicators of Innovation Activity in Economic Growth Models
Maria Reznakova, Stanislava Stefankova
Keywords:
innovation, knowledge spillover, economic growth, generalized method of moments, propensity to patent
Abstract:
Our extensive literature review shows that innovations are fundamental to maintaining
competitiveness at both micro- and macro-economic levels. In this study, we address how to
improve the measurement of innovations and their impact on a country’s competitiveness and
economic growth. We provide an overview of indicators used to measure innovations and propose
three new ones that are supposed to capture knowledge spillover: The Foreign Knowledge Inflow,
Domestic Knowledge Outflow, and General Propensity to Patent. Innovation was proxied by the
number of patent applications, which we supplemented with indexes measuring the origin of
knowledge and its transfer. We employed the system GMM method on panel data of 56 countries
for 2002–2019 to confirm and compare the informational value of standard innovation indicators
and our indexes. Implementation of indexes revealed the counteracting impact of patenting on
economic growth when the positive effect of innovation creation is weakened by knowledge
disclosure. We provide evidence that a low propensity to patent facilitates growth. The impact
of foreign knowledge on an economy is dependent on its technological capacity. The infusion
of foreign knowledge boosts the growth of fast-growing economies but inhibits the growth of
less technologically sophisticated ones. This supports our assumption that when researching the
impact of innovations on economic growth, it is crucial to consider additional factors. Hence,
index implementation appears to be the correct method.
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 New Indicators of Innovation Activity in Economic Growth Models [PDF file] [Filesize: 612.44 KB]
 10.7441/joc.2022.03.09
Reznakova, M., & Stefankova, S. (2022). New Indicators of Innovation Activity in Economic Growth
Models. Journal of Competitiveness, 14(3), 153–172. https://doi.org/10.7441/joc.2022.03.09
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