The Impact of Innovation on Economic Growth, Foreign Direct Investment, and Self-Employment: A Global Perspective

Juan Dempere (), Muhammad Qamar, Hesham Allam and Sabir Malik
Additional contact information
Juan Dempere: School of Business, Higher Colleges of Technology, Ras Al Khaimah P.O. Box 4792, United Arab Emirates
Muhammad Qamar: School of Business, Higher Colleges of Technology, Ras Al Khaimah P.O. Box 4792, United Arab Emirates
Hesham Allam: Department of Computer Information Systems, Higher Colleges of Technology, Abu Dhabi P.O. Box 25026, United Arab Emirates
Sabir Malik: School of Accounting, Economics and Finance, University of Portsmouth, Portsmouth PO1 3DE, UK

Economies, 2023, vol. 11, issue 7, 1-22

Abstract: This paper aims to investigate the impact of innovation on three macroeconomic indicators: GDP, self-employment, and foreign direct investment (FDI). The study analyses a sample of 120 countries using the Global Innovation Index (GII) and its constituent sub-indices and pillars, which provide a holistic evaluation of national innovation. Gross domestic product (GDP) per capita measures a country’s economic output, self-employment assesses entrepreneurial activity, and FDI indicates confidence in a country’s economic prospects and innovation trends. This study analyzes the data using generalized-linear and panel-corrected standard-error models. The results show that innovation positively influences GDP, domestic institutional framework, local infrastructure, local knowledge and technology, and creative outputs. In contrast, innovation negatively correlates with domestic self-employment, often associated with necessity-driven entrepreneurship. The study concludes that innovation positively affects human resources, research, and creative outputs and has no significant impact on FDI. The findings suggest that a practical regulatory framework, institutional support, domestic human capital, research and development, infrastructure, technology, and creative outputs are essential for a vibrant economy. National innovation policies supporting the GII and its constituent factors can positively affect the economy while reducing self-employment.

Keywords: innovation; FDI; entrepreneurship; Global Innovation Index; self-employment; foreign direct investment; economic growth; GDP; creative outputs; globalization (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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