THE IMPACT OF INNOVATIONS ON ECONOMIC

GROWTH: CASE OF INDIA

Abstract

Innovation is a crucial factor in the growth and development of an economy. It is the key driver of
productivity, competitiveness, and growth. In this paper, we aim to investigate the impact of
innovation on economic growth. We use a range of empirical studies to highlight the various ways in
which innovation can contribute to economic growth. Our findings show that innovation has a
positive impact on economic growth, and that this impact is mediated by a range of factors,
including the patents, export of technology, expenditure on research and development, ICT service
export Domestic credit to private sector as indicator of financial technology. It is concluded that,
there is significance relationship between innovation and Economic growth
Research design
OBJECTIVES
The Objectives of the study are:
(i) to discover the role of innovation in the economic growth of India.
(ii) to Investigate whether the innovation has an impact on the economic development of the
country

Hypothesis
H1: there is significance relationship between innovation and GDP
H2: there is significance relationship between innovation and export
H3: there is significance relationship between innovation and Gross Capital formation
methodology
The data are collected for a period of 11 years from 2001 to 2021 from single source, World
bank.
The data are then analyse using multiple regression moder (Multiple R). Regression statistics
of a multiple regression model Multiple R (significance F) which measures the strength and
direction of the linear relationship between the independent variables and the dependent
variable.
P-value< 0.05 there is significant relationship between the Innovations and Economic
growth. So, the Null Hypothesis (H0) is rejected and the Alternative Hypothesis(H1) is
accepted

P-value > 0.05 there is no significance relationship between the Innovation and
Economic growth. The Null Hypothesis (H0) is accepted and the Alternative
Hypothesis(H1) is rejected.
 VARIABLES EXPLAINATION
  INDICATOR OF ECONOMIC GROWTH
GDP GDP at purchaser's prices is the sum of gross value added by all
resident producers in the economy plus any product taxes and minus
any subsidies not included in the value of the products. It is calculated
without making deductions for depreciation of fabricated assets or for
depletion and degradation of natural resources. Data are in current $
Gross capital formation Gross capital formation (formerly gross domestic investment) consists
of outlays on additions to the fixed assets of the economy plus net
changes in the level of inventories. Fixed assets include land
improvements (fences, ditches, drains, and so on); plant, machinery,
and equipment purchases; and the construction of roads, railways,
and the like, including schools, offices, hospitals, private residential
dwellings, and commercial and industrial buildings
export Exports of goods and services represent the value of all goods
and other market services provided to the rest of the world. They
include the value of merchandise, freight, insurance, transport,
travel, royalties, license fees, and other services, such as
communication, construction, financial, information, business,
personal, and government services. They exclude compensation
of employees and investment income (formerly called factor
services) and transfer payments. Data are in current U.S. dollars.
  VARIABLES OF INNOVATIONS
High-technology exports High-technology exports are products with high R&D intensity, such as
aerospace, computers, pharmaceuticals, scientific instruments, and
electrical machinery. Data are in current U.S. dollars.
Patent Patent applications are worldwide patent applications filed through
the Patent Cooperation Treaty procedure or with a national patent
office.
R&D expenditure Gross domestic expenditures on research and development (R&D),
expressed as a percent of GDP. They include both capital and current
expenditures in the four main sectors: Business enterprise,
Government, Higher education and Private non-profit. R&D covers
basic research, applied research, and experimental development.
ICT service export Information and communication technology service exports include
computer and communications services (telecommunications and
postal and courier services) and information services (computer data
and news-related service transactions). Data are in current U.S.
dollars.
Domestic credit Domestic credit to private sector refers to financial resources
provided to the private sector by financial corporations, such as
through loans, purchases of nonequity securities, and trade credits
and other accounts receivable, that establish a claim for repayment.
Table 1. Significance F (p-values) for Multiple R. between innovation and GDP
ANOVA
d Significan
  f SS MS F ce F
Regressi 2.6E+2 4.34E+ 184.03
on 6 4 23 24 1.07E-05
1.18E+ 2.36E+
Residual 5 22 21    
1 2.61E+
Total 1 24      
In the case of Innovation and GDP, the significance F value is 1.06747E-05, which is less
than the standard alpha level of 0.05. (P-value<0.05). This indicates that there is significant
relationship between the innovations and the Exports. Null Hypothesis(H0) is rejected and
the alternative Hypothesis(H1) is accepted. It can be concluded that that the innovation
impacts the economic growth in the country
Table 2. Significance F (p-values) for Multiple R. between innovation and export
ANOVA
d Significan
  f SS MS F ce F
Regressi 0.0062 0.0012 21.036
on 5 21 44 46 0.000969
0.0003 5.91E-
Residual 6 55 05    
1 0.0065
Total 1 76      
In the case of Innovation and Export, the significance F is 0.000969439, which is less than
standard alpha level 0.05, (P-value<0.05). This means that there is relationship between the
innovations and the Exports. Therefore, the Null Hypothesis(H0) is rejected and the
alternative Hypothesis(H1) is accepted. It can be concluded that that the innovation
impacts the economic growth in the country.
Table 3. Significance F (p-values) for Multiple R between innovation and GCF
ANOVA
d Significan
  f SS MS F ce F
Regressi 1.18E+ 1.96E+ 13.867
on 6 23 22 33 0.005548
7.07E+ 1.41E+
Residual 5 21 21    
1 1.25E+
Total 1 23      
Similarly, In the case of Innovation and Export, the significance F is 0.005548, which is less
than standard alpha level 0.05, (P-value<0.05). This means that there is relationship
between the innovations and the Exports. Therefore, the Null Hypothesis(H0) is rejected
and the alternative Hypothesis(H1) is accepted. It can be concluded that that the
innovation impacts the economic growth in the country
The findings of the study suggest that innovation has had a positive impact on economic
growth in India. The results of the regression analysis indicate that innovation explains a
significant proportion of the variation in economic growth in India. The study also identifies
some of the challenges that continue to hinder innovation in India, including inadequate
infrastructure, lack of access to finance, and a shortage of skilled labour. The study relies on
data from a single source, world bank database which may limit the generalizability of the
findings. While the data is drawn from a specific database, and there may be other relevant
variables that are not included in the analysis. The study does not account for the quality of
innovation or the degree of technological sophistication. It is possible that some types of
innovation are more impactful than others, or some of the independent variables are not
impactable to the dependent variable and this may not be captured by the variables we
considered for the study. The study does not consider the impact of innovation on social and
environmental factors. While innovation can drive economic growth, it may also have
negative impacts on social welfare and the environment. The policy interventions to support
innovation may be an effective means of promoting economic growth in other developing
countries. In conclusion, this research paper contributes to our understanding of the
relationship between innovation and economic growth in India.