On the Technology-Growth Relationship: Does the Institutional Quality Matter? A Panel Simultaneous Equation Framework

Hichem Saidi (), Abdelaziz Hakimi () and Houssem Rachdi ()
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Hichem Saidi: ESCT Business School
Abdelaziz Hakimi: Economics and Management of Jendouba
Houssem Rachdi: IHEC Carthage Business School

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 141, 3439-3465

Abstract: Abstract This paper investigates the two-way linkages between technology and growth in the presence of institutional quality measured by corruption, government instability, law and order, and investment profile. To achieve these goals, we used a sample of 80 developed and developing countries over the period 1999–2018. To control for the potential endogenous relationship between technology and growth, we performed the panel simultaneous equation model as an empirical approach. The empirical results suggest that there is feedback causality between technology and growth. Under advanced technology and strong institutional quality, it results in an increase in the level of economic growth. Reciprocally, the rise of growth and governance has a positive and significant effect on technology. Furthermore, we found that the effect of technology on growth depends on the marginal effects of each measure of institutional quality. The paper also shows that education has an indirect effect on growth through technology.

Keywords: Technology; Institutional quality; Economic growth; Simultaneous equations (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01228-6

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