Research Article


DOI :10.26650/ekoist.2022.36.1102470   IUP :10.26650/ekoist.2022.36.1102470    Full Text (PDF)

Factors Affecting Innovation in OECD Countries

Umut AkduğanNilhun Doğan

Innovation has a key role in countries’ ability to integrate into the global economy, thereby necessitating the creation and sustainability of a national innovation climate. Countries generate positive economic and social development by promoting increased innovation, particularly in terms of significant advantages in global competition. Therefore, the factors affecting innovation gain importance and rank at the center of economic research. This study endeavors to investigate the factors affecting innovation by estimating a panel VAR model with a dataset of selected OECD countries. Annual data on the number of domestic patents, GDP, trade openness, foreign direct investment, R&D, and education expenditure were used for the 1981-2019 period. A panel Granger causality test and variance decomposition analysis were conducted based on the panel VAR results, and impulse-response functions were further interpreted. Findings revealed that GDP, trade openness, foreign direct investment, and R&D expenditures are the key factors affecting innovation.

DOI :10.26650/ekoist.2022.36.1102470   IUP :10.26650/ekoist.2022.36.1102470    Full Text (PDF)

İnovasyonu Etkileyen Faktörler: OECD Ülkeleri Örneği

Umut AkduğanNilhun Doğan

İnovasyon, ülkelerin küresel ekonomiye entegre olabilmesinde kilit rol oynamaktadır. Bu da inovasyon ikliminin oluşturulmasını ve sürdürülebilirliğini gerekli kılmaktadır. Ülkeler daha çok inovasyon yaratarak ekonomik ve sosyal açıdan olumlu gelişmeler sağlamakta, özellikle küresel rekabette önemli bir avantaj elde etmektedir. Dolayısıyla inovasyonu etkileyen faktörler önem kazanmakta ve araştırmaların odağında yer almaktadır. Bu çalışmanın amacı; inovasyonu etkileyen faktörlerin, Panel VAR modelinin seçilmiş OECD ülkelerine ilişkin panel veri seti kullanılarak tahmin edilmesiyle araştırılmasıdır. Bu bağlamda; 1981-2019 dönemi için, yerli patent sayısı, GSYH, ticari dışa açıklık, doğrudan yabancı yatırımlar, Ar-Ge harcamaları ve eğitim harcamaları değişkenlerine ait yıllık veriler kullanılmıştır. Bu doğrultuda tahmin edilen panel VAR modeline dayanarak panel Granger nedensellik testi ve varyans ayrıştırma analizi yapılmıştır. Buna ilaveten etki-tepki fonksiyonları da yorumlanmıştır. Elde edilen bulgular, incelenen dönem ve örneklem ile kullanılan yöntemler kapsamında değerlendirildiğinde; GSYH, ticari dışa açıklık, doğrudan yabancı yatırımlar ve Ar-Ge harcamalarının inovasyonu etkileyen faktörler olduğu sonucuna ulaşılmıştır.


EXTENDED ABSTRACT


In contemporary economic inquiry and public policy, the concept of innovation has gained more significance compared with previous years. One reason for this is countries’ efforts to leverage the phenomenon of globalization in their interests. Countries can integrate into the global economy and increase gross national income through innovation that will turn globalization to their favor. Innovation is of substantial significance for businesses’ growth and longevity. It is one of the primary factors required for business survival and sustained development in the global economy. Because of globalization, companies must be more creative and exploratory in the face of increasing competition and scientific and technological development. Companies’ survival now depends on their level of innovation and technological development. Innovation activities have a crucial impact on countries’ economic growth and development. It is at the heart of economic growth and development and has strategic importance for policymakers and business leaders to increase national global competitiveness, welfare, and quality of life.

Reviewing previous empirical studies on innovation and the factors affecting innovation, a limited number of studies have used multivariate models. Although many studies examine the relationship between innovation and various variables, multivariate linear regression models are predominantly used in these limited studies.

This study aims to investigate the factors affecting innovation. A panel VAR model was estimated using a panel dataset for selected OECD countries for the period 1981–2019. The model was estimated using the sample countries’ annual data on the number of domestic patents as the dependent variable and independent variables of GDP, trade openness, foreign direct investment, R&D, and education expenditure. Based on the predicted panel VAR model, a panel Granger causality test and variance decomposition analysis were performed, and impulse-response functions were interpreted.

The findings of the VAR analyses were threefold: i) The Granger causality test between a causal relationship from the variables of trade openness, foreign direct investment, and R&D and the number of patents. ii) Impulse-response functions indicated that the variables of GDP, trade openness, and R&D expenditure positively affect the number of patents in the short run. iii) A variance decomposition analysis demonstrated that the most crucial variable affecting the number of patents is GDP.

According to these findings, GDP, trade openness, foreign direct investment, and R&D expenditure are the primary factors affecting innovation.

Considering the results, an increased demand for the innovation process and innovative applications positively affect innovation. Because increased income is measured using GDP, rising foreign trade volume and foreign direct investment inflow are the most significant variables for the increasing innovation demand. The positive effect of increased GDP on innovation is also quite significant in terms of facilitating innovation and R&D financing and support and expanding purchasing power. R&D expenditure was revealed to be the primary mechanism of countries’ innovation level. 


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Akduğan, U., & Doğan, N. (2022). Factors Affecting Innovation in OECD Countries. Ekoist: Journal of Econometrics and Statistics, 0(36), 111-136. https://doi.org/10.26650/ekoist.2022.36.1102470


AMA

Akduğan U, Doğan N. Factors Affecting Innovation in OECD Countries. Ekoist: Journal of Econometrics and Statistics. 2022;0(36):111-136. https://doi.org/10.26650/ekoist.2022.36.1102470


ABNT

Akduğan, U.; Doğan, N. Factors Affecting Innovation in OECD Countries. Ekoist: Journal of Econometrics and Statistics, [Publisher Location], v. 0, n. 36, p. 111-136, 2022.


Chicago: Author-Date Style

Akduğan, Umut, and Nilhun Doğan. 2022. “Factors Affecting Innovation in OECD Countries.” Ekoist: Journal of Econometrics and Statistics 0, no. 36: 111-136. https://doi.org/10.26650/ekoist.2022.36.1102470


Chicago: Humanities Style

Akduğan, Umut, and Nilhun Doğan. Factors Affecting Innovation in OECD Countries.” Ekoist: Journal of Econometrics and Statistics 0, no. 36 (Aug. 2022): 111-136. https://doi.org/10.26650/ekoist.2022.36.1102470


Harvard: Australian Style

Akduğan, U & Doğan, N 2022, 'Factors Affecting Innovation in OECD Countries', Ekoist: Journal of Econometrics and Statistics, vol. 0, no. 36, pp. 111-136, viewed 8 Aug. 2022, https://doi.org/10.26650/ekoist.2022.36.1102470


Harvard: Author-Date Style

Akduğan, U. and Doğan, N. (2022) ‘Factors Affecting Innovation in OECD Countries’, Ekoist: Journal of Econometrics and Statistics, 0(36), pp. 111-136. https://doi.org/10.26650/ekoist.2022.36.1102470 (8 Aug. 2022).


MLA

Akduğan, Umut, and Nilhun Doğan. Factors Affecting Innovation in OECD Countries.” Ekoist: Journal of Econometrics and Statistics, vol. 0, no. 36, 2022, pp. 111-136. [Database Container], https://doi.org/10.26650/ekoist.2022.36.1102470


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Akduğan U, Doğan N. Factors Affecting Innovation in OECD Countries. Ekoist: Journal of Econometrics and Statistics [Internet]. 8 Aug. 2022 [cited 8 Aug. 2022];0(36):111-136. Available from: https://doi.org/10.26650/ekoist.2022.36.1102470 doi: 10.26650/ekoist.2022.36.1102470


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Akduğan, Umut - Doğan, Nilhun. Factors Affecting Innovation in OECD Countries”. Ekoist: Journal of Econometrics and Statistics 0/36 (Aug. 2022): 111-136. https://doi.org/10.26650/ekoist.2022.36.1102470



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Submitted12.04.2022
Accepted26.04.2022
Published Online07.06.2022

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