School of Business Montclair State University Upper Montclair, New Jersey 07043

• School of Business
• Montclair State University
• Upper Montclair, New Jersey 07043
• The Role of Creative Innovation
• in Economic Growth:
• Some International Comparisons
• March 2007
• Phillip LeBel
• Professor of Economics
• School of Business
• Department of Economics and Finance
• Montclair State University
• Upper Montclair, New Jersey 07043
• [e-mail]

Abstract Export-driven policies in East Asia have thus far produced dramatic increases in real per capita income. At the same time, sustainable growth requires that technological innovation proceed at comparable rates if mutual gains from globalization are to be realized. In this paper, we derive a measure of innovation and test the extent to which institutional policy choices enhance or delay its diffusion. To do so we use a panel regression model, with data on a sample of countries for the 1980-2005 period. Our findings provide empirical evidence of the positive role of creative innovation in economic growth, and from which we derive several basic policy conclusions. Key words: economic growth, innovation, risk, institutional governance JEL codes: P48, 038, D02, D73

Growth Accounting: 1. Y=f(L,K,T) 2. Y=A(K,L) 3. R=s/k 4. Y=f(S,TRDEP) Optimal Innovation:

• 5.

• 6.

• 8.

• 7.

• 9.

• 10. INNOVINDEX = (Per Capita Scientific Citations+Per Capita Net Royalty Ratio)/2

• 11. PPPRPCGDP = f(GNSGDP, TRDEP, RCRISK, INNOVATION)

Table 1 Global Sample Basic Growth Equations

Figure 1 Expanded Model of Institutional Innovation

Table 2 Global Sample Expanded Model Regression Estimates

Table 3 Expanded Model Regional Regression Estimates