Nexus among innovations, financial development and economic growth in developing countries

Marc Audi, Amjad Ali and Hani Fayad Hamadeh

MPRA Paper from University Library of Munich, Germany

Abstract: Studying the level of economic growth remains a topic of discussion among economists and policymakers. As economic growth further impacts the socioeconomic development of the country. The present study has investigated the impact of innovations and financial development on economic growth in case 58 developing counties from 2000 to 2020. To analyze the stationarity of the variables LLC, ADF-Fisher, IPS, and PP-Fisher unit roots have been used. This study uses a panel autoregressive distribution lag co-integration approach and a vector error-correction model for short-run dynamics of the model. For investigating the causal relationship among the variables variance decomposition and impulse response function have been applied. The outcomes of the study show that innovations, availability of physical capital, and trade have a positive and significant impact on economic growth. The results show that financial development has a negative and significant impact on economic growth. It is suggested that for higher economic growth, developing countries improve the threshold level of financial development and use an innovative process of production. Urbanization and inflation hurt economic growth. Thus, developing countries should promote a stable inflation rate with liberalized trade, innovation, and physical capital to enhance economic growth.

Keywords: economic growth; financial development; inflation rate; innovations (search for similar items in EconPapers)
JEL-codes: E31 G20 O30 O40 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-fdg and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/115220/1/MPRA_paper_115220.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:115220

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().