IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v11y2023i7p182-d1187515.html
   My bibliography  Save this article

The Impact of Innovation on Economic Growth, Foreign Direct Investment, and Self-Employment: A Global Perspective

Author

Listed:
  • Juan Dempere

    (School of Business, Higher Colleges of Technology, Ras Al Khaimah P.O. Box 4792, United Arab Emirates)

  • Muhammad Qamar

    (School of Business, Higher Colleges of Technology, Ras Al Khaimah P.O. Box 4792, United Arab Emirates)

  • Hesham Allam

    (Department of Computer Information Systems, Higher Colleges of Technology, Abu Dhabi P.O. Box 25026, United Arab Emirates)

  • Sabir Malik

    (School of Accounting, Economics and Finance, University of Portsmouth, Portsmouth PO1 3DE, UK)

Abstract

This paper aims to investigate the impact of innovation on three macroeconomic indicators: GDP, self-employment, and foreign direct investment (FDI). The study analyses a sample of 120 countries using the Global Innovation Index (GII) and its constituent sub-indices and pillars, which provide a holistic evaluation of national innovation. Gross domestic product (GDP) per capita measures a country’s economic output, self-employment assesses entrepreneurial activity, and FDI indicates confidence in a country’s economic prospects and innovation trends. This study analyzes the data using generalized-linear and panel-corrected standard-error models. The results show that innovation positively influences GDP, domestic institutional framework, local infrastructure, local knowledge and technology, and creative outputs. In contrast, innovation negatively correlates with domestic self-employment, often associated with necessity-driven entrepreneurship. The study concludes that innovation positively affects human resources, research, and creative outputs and has no significant impact on FDI. The findings suggest that a practical regulatory framework, institutional support, domestic human capital, research and development, infrastructure, technology, and creative outputs are essential for a vibrant economy. National innovation policies supporting the GII and its constituent factors can positively affect the economy while reducing self-employment.

Suggested Citation

  • Juan Dempere & Muhammad Qamar & Hesham Allam & Sabir Malik, 2023. "The Impact of Innovation on Economic Growth, Foreign Direct Investment, and Self-Employment: A Global Perspective," Economies, MDPI, vol. 11(7), pages 1-22, July.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:7:p:182-:d:1187515
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/11/7/182/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/11/7/182/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alex Coad & Paul Nightingale & Jack Stilgoe & Antonio Vezzani, 2021. "Editorial: the dark side of innovation," Industry and Innovation, Taylor & Francis Journals, vol. 28(1), pages 102-112, January.
    2. Jakob Edler & Jan Fagerberg, 2017. "Innovation policy: what, why, and how," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(1), pages 2-23.
    3. Michael Olabisi, 2017. "The Impact Of Exporting And Foreign Direct Investment On Product Innovation: Evidence From Chinese Manufacturers," Contemporary Economic Policy, Western Economic Association International, vol. 35(4), pages 735-750, October.
    4. Andre Jungmittag & Paul J. J. Welfens, 2020. "EU-US trade post-trump perspectives: TTIP aspects related to foreign direct investment and innovation," International Economics and Economic Policy, Springer, vol. 17(1), pages 259-294, February.
    5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    6. Dave Valliere & Rein Peterson, 2009. "Entrepreneurship and economic growth: Evidence from emerging and developed countries," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 21(5-6), pages 459-480, September.
    7. Natalya Smith & Ekaterina Thomas, 2017. "Regional conditions and innovation in Russia: the impact of foreign direct investment and absorptive capacity," Regional Studies, Taylor & Francis Journals, vol. 51(9), pages 1412-1428, September.
    8. Poh Wong & Yuen Ho & Erkko Autio, 2005. "Entrepreneurship, Innovation and Economic Growth: Evidence from GEM data," Small Business Economics, Springer, vol. 24(3), pages 335-350, January.
    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. Frimpong, Stephen, 2024. "Against Democracy, Neo-totalitarianism, or What? A Cross-Country Dynamic Panel Endogenous Switching Regressing Analysis of Innovation, Economic Growth, and Political Stability," World Development Perspectives, Elsevier, vol. 36(C).
    2. Yang Shuang & Muhammad Waris & Muhammad Kashif Nawaz & Cheng Chan & Ijaz Younis, 2024. "National income accounting attributes and economic welfare. Evidence from Pakistan," PLOS ONE, Public Library of Science, vol. 19(8), pages 1-21, August.
    3. Maha Kalai & Hamdi Becha & Kamel Helali, 2024. "Threshold effect of foreign direct investment on economic growth in BRICS countries: new evidence from PTAR and PSTAR models," International Journal of Economic Policy Studies, Springer, vol. 18(1), pages 227-258, February.
    4. Fiaz Ahmad Sulehri & Amjad Ali, 2024. "Nexus among Regulatory Framework, Economic Growth and Sustainable Development: Insights from Structural Equation Modeling Approach," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(1), pages 110-117.
    5. Fiaz Ahmad Sulehri & Marc Audi & Marc Poulin & Amjad Ali, 2024. "Nexus between Innovation and Ecological Impact: A Moderated Mediation Investigation through Structural Equation Modeling Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(4), pages 509-518, July.
    6. Qingyi Chen & Yuting Liu & Zuolin Yao, 2024. "Spatial–Temporal Pattern Evolution and Differentiation Mechanism of Urban Dual Innovation: A Case Study of China’s Three Major Urban Agglomerations," Land, MDPI, vol. 13(9), pages 1-22, August.
    7. Teodora Mîndra & Oana Chenaru & Radu Dobrescu & Lucian Toma, 2024. "Modular Microgrid Technology with a Single Development Environment Per Life Cycle," Energies, MDPI, vol. 17(19), pages 1-19, October.
    8. Luiz Moreira Coelho Junior & Brunna Hillary Calixto de Oliveira & Ingryd Yohane Bezerra Almeida Santos & Vanessa Batista Schramm & Fernando Schramm & Felipe Firmino Diniz & Edvaldo Pereira Santos Júni, 2025. "Sugarcane Bioelectricity Supply in Brazil: A Regional Concentration and Structural Analysis," Sustainability, MDPI, vol. 17(9), pages 1-21, April.
    9. K. V. N. Lakshmi & Geetanjali S & Swapna H. R & Nikhil M. S & Raji Rajan & Digvijay Pandey & Binay Kumar Pandey, 2025. "Circular Economy: A Catalyst for Economic Growth - An Empirical Study," Circular Economy and Sustainability, Springer, vol. 5(2), pages 729-750, April.
    10. Meer Jan & Amdadullah Baloch & Abdullah Abdulaziz Bawazir & Abdul Qayyum & Mahfoudh Hussein Mgammal, 2024. "Innovation and Path to Inclusiveness in Developing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 330-337, September.
    11. Tayyaba Rafique & Muhammad Mohsin & Muhammad Adeel Abid & Ali Noman Ashrif & Saliah Anwar, 2024. "Understanding the impact of human capital on radical and incremental innovation: the role of entrepreneurial passion and alertness," Future Business Journal, Springer, vol. 10(1), pages 1-13, December.
    12. Sulehri, Fiaz Ahmad & Ali, Amjad, 2024. "Assessing the Pathways of Sustainable Development: A Structural Equation Modeling Investigation of Regulatory Framework, Innovation, and Economic Indicators," MPRA Paper 121286, University Library of Munich, Germany.

    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. Jungsuk Kim & Cynthia Castillejos-Petalcorin & Yothin Jinjarak & Donghyun Park & Pilipinas Quising & Shu Tian, 2022. "Entrepreneurship and Economic Growth: A Cross-Sectional Analysis Perspective," ADB Economics Working Paper Series 672, Asian Development Bank.
    2. Dave Valliere, 2019. "Refining national culture and entrepreneurship: the role of subcultural variation," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-22, December.
    3. Aparicio, Sebastian & Urbano, David & Audretsch, David, 2016. "Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 45-61.
    4. Uche, Emmanuel & Ngepah, Nicholas & Onwe, Joshua Chukwuma & Zaman, Umer & Odhiambo, Nicholas M., 2024. "A question for sustainable development goal 10: How relevant is innovation patenting receipts to income distributions?," Technological Forecasting and Social Change, Elsevier, vol. 206(C).
    5. Folorunsho M. Ajide & James T. Dada, 2023. "Poverty, entrepreneurship, and economic growth in Africa," Poverty & Public Policy, John Wiley & Sons, vol. 15(2), pages 199-226, June.
    6. Marc Bogdanowicz, 2015. "Digital Entrepreneurship Barriers and Drivers - The need for a specific measurement framework," JRC Research Reports JRC96465, Joint Research Centre.
    7. Salustiano Martínez-Fierro & José María Biedma-Ferrer & José Ruiz-Navarro, 2016. "Entrepreneurship and strategies for economic development," Small Business Economics, Springer, vol. 47(4), pages 835-851, December.
    8. Thomas Neumann, 2021. "The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review," Management Review Quarterly, Springer, vol. 71(3), pages 553-584, July.
    9. Renata Dana Nițu-Antonie & Emőke-Szidónia Feder & Valentin Partenie Munteanu, 2017. "Macroeconomic Effects of Entrepreneurship from an International Perspective," Sustainability, MDPI, vol. 9(7), pages 1-21, July.
    10. Franziska Schlichte & Sebastian Junge & Jan Mammen, 2019. "Being at the right place at the right time: does the timing within technology waves determine new venture success?," Journal of Business Economics, Springer, vol. 89(8), pages 995-1021, December.
    11. Longpeng Zhang & Wei Jiang & Zhiwei Tang, 2019. "Study on the promotion effect of informationization on entrepreneurship: an empirical evidence from China," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-22, December.
    12. Emilia Vázquez & Sofia Gomes & Elvira Vieira, 2011. "Entrepreneurship and Economic Growth in Spanish and Portuguese Regions," ERSA conference papers ersa10p1537, European Regional Science Association.
    13. Catherine Laffineur & Saulo Dubard Barbosa & Alain Fayolle & Emeran Nziali, 2017. "Active labor market programs’ effects on entrepreneurship and unemployment," Small Business Economics, Springer, vol. 49(4), pages 889-918, December.
    14. HERMANS, Julie & VANDERSTRAETEN, Johanna & DEJARDIN, Marcus & RAMDANI, Dendi & STAM, Erik & VAN WITTELOOSTUIJN, Arjen, 2012. "Ambitious entrepreneurship: Antecedents and consequences," Working Papers 2012023, University of Antwerp, Faculty of Business and Economics.
    15. Prieger, James E. & Bampoky, Catherine & Blanco, Luisa R. & Liu, Aolong, 2016. "Economic Growth and the Optimal Level of Entrepreneurship," World Development, Elsevier, vol. 82(C), pages 95-109.
    16. Kai Du & Allan O’Connor, 2018. "Entrepreneurship and advancing national level economic efficiency," Small Business Economics, Springer, vol. 50(1), pages 91-111, January.
    17. Kamran Hameed & Noman Arshed & Kenneth A. Grant & Mubbasher Munir & Osama Aziz, 2023. "Forces of Dynamic Capability and Incidence of Entrepreneurship: A Macroeconomic Policy Intervention Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 3573-3597, December.
    18. Noelia Franco-Leal & Rosalia Diaz-Carrion, 2022. "How financing and information drive international corporate entrepreneurs’ innovations," Journal of International Entrepreneurship, Springer, vol. 20(2), pages 316-343, June.
    19. Fernanda Q. Sperotto & Iván G. P. Tartaruga, 2021. "The Green Side of Industry: The Drivers and the Impacts of ECO-Innovations in Brazil," Sustainability, MDPI, vol. 13(14), pages 1-23, July.
    20. Ovidiu Stoica & Angela Roman & Valentina Diana Rusu, 2020. "The Nexus between Entrepreneurship and Economic Growth: A Comparative Analysis on Groups of Countries," Sustainability, MDPI, vol. 12(3), pages 1-19, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:gam:jecomi:v:11:y:2023:i:7:p:182-:d:1187515. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.