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On the impact of innovation and inequality in economic growth

Wiston Adrián Risso and Edgar Sánchez Carrera (edgarjavier.sanchezcarrera@unifi.it)

Economics of Innovation and New Technology, 2019, vol. 28, issue 1, 64-81

Abstract: We present robust results on the empirical relationship among income inequality, innovation, and economic growth for a panel dataset of 74 countries over the period 1996–2014. We estimate pairwise causality tests to show that there is bidirectional causality between GDP per capita and R&D, while R&D causes the Gini index of income inequality, and it causes human capital. Allowing coefficients to be different across cross-sections of countries, we get in any case a pairwise bi-directionality. By dynamic panel data estimations, when regressing R&D on GDP per capita, we obtain a threshold value of 0.16% of R&D such that for values above it there is economic growth. While regressing R&D on the Gini index, we get a threshold of 0.10% of R&D above which, the income distribution begins to improve. Finally, we estimate a growth equation that depends on R&D, income inequality, and physical capital. We obtain two thresholds, one of 38.79 for the Gini (above which the economic growth decreases), and one of 0.06% for R&D such that above it, economic growth is rising.

Date: 2019
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Citations: View citations in EconPapers (17)

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DOI: 10.1080/10438599.2018.1429534

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