An investigation into the innovation-economic growth nexus in Mauritius

Harris Neeliah, Boopen Seetanah and Lomendra Vencataya

African Journal of Science, Technology, Innovation and Development, 2025, vol. 17, issue 2, 188-199

Abstract: This paper extends the existing strand of research, delving into the link between innovation and economic growth for the small island developing state of Mauritius. The innovation-growth relationship is analyzed within a multivariate endogenous growth model, spanning the period 1970 to 2019 and to account for issues of dynamism, endogeneity and omitted variables bias, a vector error correction model is employed. Our results show that, in the long-run, the economic growth elasticity of research and development (R&D) expenditure is 0.02 and a bi-directional causality between R&D expenditure and economic growth is confirmed. Although this research could not confirm a short-run elasticity from R&D expenditure to economic growth, reverse causality from growth in GDP towards growth in R&D expenditure is validated. The policy implications of our findings are multi-fold. Firstly, R&D expenditure should be increased, but increasing expenditure per se should not be a sine quanone to improve the contribution of innovation to economic growth. R&D funders should ensure that proportionately more economic growth occurs with the protracted increased investment through enhanced innovation capability.

Date: 2025
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DOI: 10.1080/20421338.2024.2445880

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