IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v161y2020ics0040162520311318.html
   My bibliography  Save this article

What nurtures fourth industrial revolution? An investigation of economic and social determinants of technological innovation in advanced economies

Author

Listed:
  • Wang, Lu
  • Luo, Gong-li
  • Sari, Arif
  • Shao, Xue-Feng

Abstract

The Fourth Industrial Revolution is characterized by technological transformations, artificial intelligence, and the digital revolution. The technological innovation in the Fourth Industrial Revolution is expected to be a supply-side miracle, with long term gains in the efficiency, as well as production. The widespread variability in the innovation performance of countries has led to the development of many underlining theoretical explanations. These explanations primarily revolve around the role of international trade, research and development, foreign direct investment, human capital, and the financial development in the Fourth Industrial Revolution. Previous studies, however, have only looked at the micro-level determinants of technological innovation. Also, previous studies have tended to ignore the cross-sectional dependency among countries, and the heterogeneity in analysing the issues that pertain to technological innovation. This study examines the macroeconomic indicators of technological innovation in G-7 countries from the year 1996 to 2017. The results show that globalization, R&D, GDP, financial development, and human capital are important factors in explaining technological innovation. Furthermore, the results of the panel causality test suggest that there is bidirectional causality from economic globalization, financial development, human capital index, research and development expenditure, and real GDP to technological innovation, and vice versa. The findings from this study may be helpful when designing policies that are related to globalization, financial development, and innovation.

Suggested Citation

  • Wang, Lu & Luo, Gong-li & Sari, Arif & Shao, Xue-Feng, 2020. "What nurtures fourth industrial revolution? An investigation of economic and social determinants of technological innovation in advanced economies," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:tefoso:v:161:y:2020:i:c:s0040162520311318
    DOI: 10.1016/j.techfore.2020.120305
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162520311318
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2020.120305?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Dincer, Oguzhan, 2019. "Does corruption slow down innovation? Evidence from a cointegrated panel of U.S. states," European Journal of Political Economy, Elsevier, vol. 56(C), pages 1-10.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Van Reenen, John & Bloom, Nicholas & Sadun, Raffaella, 2016. "Management as a Technology," CEPR Discussion Papers 11312, C.E.P.R. Discussion Papers.
    5. Robert E. Lucas, 2009. "Ideas and Growth," Economica, London School of Economics and Political Science, vol. 76(301), pages 1-19, February.
    6. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    7. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
    8. Su, Chi-Wei & Qin, Meng & Tao, Ran & Umar, Muhammad, 2020. "Financial implications of fourth industrial revolution: Can bitcoin improve prospects of energy investment?," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    9. Lee, Sangwon & Nam, Yoonjae & Lee, Seonmi & Son, Hyunjung, 2016. "Determinants of ICT innovations: A cross-country empirical study," Technological Forecasting and Social Change, Elsevier, vol. 110(C), pages 71-77.
    10. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    11. Andrés Rodríguez‐Pose & Callum Wilkie, 2019. "Innovating in less developed regions: What drives patenting in the lagging regions of Europe and North America," Growth and Change, Wiley Blackwell, vol. 50(1), pages 4-37, March.
    12. Fu, Xiaolan & Yang, Qing Gong, 2009. "Exploring the cross-country gap in patenting: A Stochastic Frontier Approach," Research Policy, Elsevier, vol. 38(7), pages 1203-1213, September.
    13. Barro, Robert J, 1996. "Institutions and Growth, an Introductory Essay," Journal of Economic Growth, Springer, vol. 1(2), pages 145-148, June.
    14. Castellacci, Fulvio & Natera, Jose Miguel, 2013. "The dynamics of national innovation systems: A panel cointegration analysis of the coevolution between innovative capability and absorptive capacity," Research Policy, Elsevier, vol. 42(3), pages 579-594.
    15. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    16. Su, Chi-Wei & Qin, Meng & Tao, Ran & Shao, Xue-Feng & Albu, Lucian Liviu & Umar, Muhammad, 2020. "Can Bitcoin hedge the risks of geopolitical events?," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    17. Chudik, Alexander & Pesaran, M. Hashem, 2015. "Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors," Journal of Econometrics, Elsevier, vol. 188(2), pages 393-420.
    18. Pesaran, M. Hashem & Vanessa Smith, L. & Yamagata, Takashi, 2013. "Panel unit root tests in the presence of a multifactor error structure," Journal of Econometrics, Elsevier, vol. 175(2), pages 94-115.
    19. Rod Falvey & Neil Foster & David Greenaway, 2006. "Intellectual Property Rights and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 700-719, November.
    20. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    21. Impullitti, Giammario & Akcigit, Ufuk & Ates, Sina T., 2018. "Innovation and Trade Policy in a Globalized World," CEPR Discussion Papers 15804, C.E.P.R. Discussion Papers.
    22. Aghion, Philippe & Howitt, Peter, 2005. "Growth with Quality-Improving Innovations: An Integrated Framework," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 2, pages 67-110, Elsevier.
    23. Berg, S. & Wustmans, M. & Bröring, S., 2019. "Identifying first signals of emerging dominance in a technological innovation system: A novel approach based on patents," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 706-722.
    24. Robert Huggins & Piers Thompson, 2015. "Entrepreneurship, innovation and regional growth: a network theory," Small Business Economics, Springer, vol. 45(1), pages 103-128, June.
    25. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    26. Wang, Chengqi & Kafouros, Mario I., 2009. "What factors determine innovation performance in emerging economies? Evidence from China," International Business Review, Elsevier, vol. 18(6), pages 606-616, December.
    27. Grossman, Gene M & Helpman, Elhanan, 1990. "Trade, Innovation, and Growth," American Economic Review, American Economic Association, vol. 80(2), pages 86-91, May.
    28. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    29. Stephan, Annegret & Bening, Catharina R. & Schmidt, Tobias S. & Schwarz, Marius & Hoffmann, Volker H., 2019. "The role of inter-sectoral knowledge spillovers in technological innovations: The case of lithium-ion batteries," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    30. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 505-518, April.
    31. Moaniba, Igam M. & Su, Hsin-Ning & Lee, Pei-Chun, 2019. "On the drivers of innovation: Does the co-evolution of technological diversification and international collaboration matter?," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    32. Xavier Cirera & William F. Maloney, 2017. "The Innovation Paradox," World Bank Publications - Books, The World Bank Group, number 28341, December.
    33. David B. Audretsch & Roy Thurik, 2001. "Linking Entrepreneurship to Growth," OECD Science, Technology and Industry Working Papers 2001/2, OECD Publishing.
    34. Su, Chi-Wei & Qin, Meng & Tao, Ran & Umar, Muhammad, 2020. "Does oil price really matter for the wage arrears in Russia?," Energy, Elsevier, vol. 208(C).
    35. Gene M. Grossman & Elhanan Helpman, 2015. "Globalization and Growth," American Economic Review, American Economic Association, vol. 105(5), pages 100-104, May.
    36. Mao, Caixia & Koide, Ryu & Brem, Alexander & Akenji, Lewis, 2020. "Technology foresight for social good: Social implications of technological innovation by 2050 from a Global Expert Survey," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    37. Sea-Jin Chang & Jay Hyuk Rhee, 2011. "Rapid FDI expansion and firm performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(8), pages 979-994, October.
    38. Lewis S. Davis & Fuat Şener, 2012. "Intellectual Property Rights, Institutional Quality And Economic Growth," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 1-28.
    39. Mita Bhattacharya & Harry Bloch, 2004. "Determinants of Innovation," Small Business Economics, Springer, vol. 22(2), pages 155-162, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bhimani, Alnoor & Hausken, Kjell & Arif, Sameen, 2022. "Do national development factors affect cryptocurrency adoption?," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    2. Hadjielias, Elias & Christofi, Michael & Christou, Prokopis & Hadjielia Drotarova, Maria, 2022. "Digitalization, agility, and customer value in tourism," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    3. Chiarello, Filippo & Fantoni, Gualtiero & Hogarth, Terence & Giordano, Vito & Baltina, Liga & Spada, Irene, 2021. "Towards ESCO 4.0 – Is the European classification of skills in line with Industry 4.0? A text mining approach," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    4. Cannavacciuolo, Lorella & Ferraro, Giovanna & Ponsiglione, Cristina & Primario, Simonetta & Quinto, Ivana, 2023. "Technological innovation-enabling industry 4.0 paradigm: A systematic literature review," Technovation, Elsevier, vol. 124(C).
    5. Camilla Bruna Dias Souza & Henrique Rego Monteiro Hora & Edson Terra Azevedo Filho, 2023. "Socioeconomic indicators and innovative countries associated with data mining evidence," SN Business & Economics, Springer, vol. 3(2), pages 1-24, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chi, Meiqing & Muhammad, Sulaman & Khan, Zeeshan & Ali, Shahid & Li, Rita Yi Man, 2021. "Is centralization killing innovation? The success story of technological innovation in fiscally decentralized countries," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    2. Wang, Chenguang & Qiao, Cuixia & Ahmed, Rahil Irfan & Kirikkaleli, Dervis, 2021. "Institutional Quality, Bank Finance and Technological Innovation: A way forward for Fourth Industrial Revolution in BRICS Economies," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    3. Yuan, Shengjun & Musibau, Hammed Oluwaseyi & Genç, Sema Yılmaz & Shaheen, Riffat & Ameen, Anam & Tan, Zhixiong, 2021. "Digitalization of economy is the key factor behind fourth industrial revolution: How G7 countries are overcoming with the financing issues?," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    4. Sakshi Malik, 2023. "Macroeconomic Determinants of Innovation: Evidence from Asian Countries," Global Business Review, International Management Institute, vol. 24(1), pages 137-151, February.
    5. Gulcin Guresci Pehlivan & Yagmur Saglam, 2016. "The Impact of Foreign Direct Investments on Economic Growth: The Case of MENA Region," Discussion Papers 2016/01, Yasar University, Department of Economics.
    6. Quynh Chau Pham Holland & Benjamin Liu & Eduardo Roca, 2019. "International funding cost and heterogeneous mortgage interest-rate pass-through: a bank-level analysis," Empirical Economics, Springer, vol. 57(4), pages 1255-1289, October.
    7. Mohsen Mohammadi Khyareh & Nasrin Rostami, 2022. "Macroeconomic Conditions, Innovation and Competitiveness," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(2), pages 1321-1340, June.
    8. Mounir Dahmani & Mohamed Mabrouki & Adel Ben Youssef, 2022. "The Information and Communication Technologies-Economic Growth Nexus in Tunisia - A Cross-Section Dynamic Panel Approach," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 18(2), pages 161-174.
    9. Zhou, Rong & Su, Kaihua & Zheng, Li, 2022. "Natural resources led growth and the role of financial development: Evidence from Next-11 economies," Resources Policy, Elsevier, vol. 79(C).
    10. Mariam Camarero & Sergi Moliner & Cecilio Tamarit, 2022. "Which are the long-run determinants of US outward FDI? Evidence using large long-memory panels," Working Papers 2022.08, International Network for Economic Research - INFER.
    11. Liang, Huijun & Shi, Changkuan & Abid, Nabila & Yu, Yanliang, 2023. "Are digitalization and human development discarding the resource curse in emerging economies?," Resources Policy, Elsevier, vol. 85(PB).
    12. Eberhardt, Markus & Teal, Francis, 2008. "Modeling technology and technological change in manufacturing: how do countries differ?," MPRA Paper 10690, University Library of Munich, Germany.
    13. Gu, Jianqiang & Gouliamos, Kostas & Lobonţ, Oana-Ramona & Nicoleta-Claudia, Moldovan, 2021. "Is the fourth industrial revolution transforming the relationship between financial development and its determinants in emerging economies?," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    14. Sun, Yanpeng & Chang, Hsuling & Vasbieva, Dinara G. & Andlib, Zubaria, 2022. "Economic performance, investment in energy resources, foreign trade, and natural resources volatility nexus: Evidence from China's provincial data," Resources Policy, Elsevier, vol. 78(C).
    15. Dobdinga Cletus Fonchamnyo & Ongo Nkoa Bruno Emmanuel & Gildas Dohba Dinga, 2021. "The effects of trade, foreign direct investment, and economic growth on environmental quality and overshoot: a dynamic common correlation effects approach," SN Business & Economics, Springer, vol. 1(10), pages 1-27, October.
    16. Umut Akdugan & Nilhun Dogan, 2022. "Factors Affecting Innovation in OECD Countries," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(36), pages 111-136, June.
    17. Xu, Tao, 2018. "Investigating Environmental Kuznets Curve in China–Aggregation bias and policy implications," Energy Policy, Elsevier, vol. 114(C), pages 315-322.
    18. Ma, Yechi & Chen, Zhiguo & Shinwari, Riazullah & Khan, Zeeshan, 2021. "Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?," Resources Policy, Elsevier, vol. 72(C).
    19. Li, Xuelin & Yang, Lin, 2023. "Natural resources, remittances and carbon emissions: A Dutch Disease perspective with remittances for South Asia," Resources Policy, Elsevier, vol. 85(PB).
    20. Chakraborty, Saptorshee Kanto & Mazzanti, Massimiliano, 2021. "Renewable electricity and economic growth relationship in the long run: Panel data econometric evidence from the OECD," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 330-341.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:161:y:2020:i:c:s0040162520311318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.