Examining the Impact of Innovations on Economic Growth in BRICS Countries

Abstract

The study investigated the causal nexus between innovations and economic growth of Brazil, Russia, India, China and South Africa (BRICS) countries using panel data for the period 2004–2019. The total number of patent applications, the total number of trademark applications and percentages share of research and development expenditures to GDP are used as a proxy to measure innovations. The study used a panel regression with a fixed and random effect model, panel vector autoregression (VAR) model and impulse response function for the analysis. Further, the study checked both the symmetric and asymmetric impacts of innovations on economic growth using the panel autoregressive distributed lag (ARDL) model. The results from different econometric approaches are consistent and found that innovations positively and significantly impact economic growth. The results have also shown that there is a unidirectional causality running from innovations to per capita GDP in the short run. Finally, the results have shown the asymmetric causal linkage between innovations and economic growth. The study suggests that policymakers must encourage more investments in innovations for high economic growth in BRICS countries.