Innovation Factors and its Effect on the GDP Per Capita of Selected ASEAN Countries: An Application of Paul Romer's Endogenous Growth Theory
DOI:
https://doi.org/10.5555/ijosmas.v3i2.124Keywords:
Endogenous Growth, Technological Change, Innovation, Long-run Growth ModelAbstract
Romer’s endogenous growth theory highlighted the importance of intentional actions and efforts made by firms to cultivate a culture of innovation and ideas and its eventual effects on economic growth. This study aims to measure whether there is a positive relationship between innovation using Urbanization (URB), research and development (R&D), and human capital (HC) on
economic growth. Innovation will be represented by the URB rate per percentage in total population, research and development (R&D), and HC will be assessed using its GlobalInnovation Index ratings. Economic growth will be measured using the Log of Gross Domestic Product (LGDP) per capita. This study will utilize a panel data regression, Pooled Ordinary Least
Square analysis, to determine the relationship in the selected Association of Southeast Asian Nations countries (Indonesia, Malaysia, Philippines, Vietnam) between the years 2013-2020. Results show that URB and HC significantly impact LGDP per capita, while R&D is insignificant. The insignificance found in this study can be explained by the fact that the countries selected are
developing countries and that it would take time for R&D to impact their economic growth. Despite the insignificant impact of R&D activities, they should still be actively promoted in these countries, as it will gradually increase the level of innovation with time as explained in the long-run increasing returns of scale and the endogenous growth theory, thus proves Romer’s theory is present in Indonesia, Malaysia, Philippines, Vietnam.
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