The information revolution, innovation diffusion and economic growth: an examination of causal links in European countries

Rudra P. Pradhan, Mak Arvin, Mahendhiran Nair (), Sara E. Bennett () and John H. Hall ()
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Rudra P. Pradhan: Indian Institute of Technology
Mahendhiran Nair: Monash University Malaysia
Sara E. Bennett: University of Lynchburg
John H. Hall: University of Pretoria

Quality & Quantity: International Journal of Methodology, 2019, vol. 53, issue 3, No 21, 1529-1563

Abstract: Abstract Over the last 5 decades, the economic landscape in Europe has been transformed rapidly due to innovation, digitisation of the economy, and emergence of new sources of growth. However, the complex dynamics among diffusion of innovation, penetration of information and communication technology (ICT), and economic growth have not been adequately studied. This paper investigates the relationships among these three variables for European countries over 1961–2016. The goal is to determine whether the direction of causality among the variables runs both ways, one way, or not at all. Using a vector error-correction model, we find that in the long run, both innovation diffusion and ICT penetration stimulate economic growth. In the short run, however, the causal links are not always uniform and depend on proxies that are used for innovation diffusion and ICT penetration. The results provide valuable insights on the types of policies and strategies that would sustain economic growth in European economies.

Keywords: Innovation diffusion; ICT penetration; Economic growth; VECM (search for similar items in EconPapers)
JEL-codes: E31 E44 O16 O43 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (14)

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DOI: 10.1007/s11135-018-0826-2

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