To innovate or to import innovation? Evidence from African countries

Abstract

This study examines the relationship between innovation and economic growth. More precisely, it seeks to check whether African countries should choose to innovate locally by investing in research and development (R&D) instead of importing innovative technology. To achieve this goal, we used a sample of 21 African countries from 2009 to 2018. Results of the seemingly unrelated regression (SUR) model indicate that GDP growth does not respond to local innovation in African countries. However, we found that imported innovation is positively and significantly correlated with GDP growth. Findings also indicate that domestic investment, trade openness, and infrastructure substantially stimulate growth in African countries. Nevertheless, inflation negatively impacts economic growth when innovation is imported.