Innovation and Path to Inclusiveness in Developing Countries

Abstract

This study examines the effect of innovation on inclusive growth in 63 developing countries and employs System Generalized Method of Moments (GMM) estimation techniques. The study used the global innovation index to measure innovation. In addition, we construct an index of inclusive growth. Further, due to the complex nature of inclusive growth, using a single index may not provide the full picture. So, for substantial empirical support, the study uses a set of dimensions of inclusive growth separately. The empirical results show a positive relationship between the measures of innovation with inclusive growth. Further, the study also constructs indifference curves for selected developing economies to measure the inclusiveness in growth. Finally, it is suggested that developing economies should put in policies to promote innovation activities that include poor segments of society to improve the impact of innovation on inclusive growth.