TY - JOUR AU - Nihal, Grii AU - Mounia, Cherkaoui AU - Hussain, Mujahid AU - Humayun, Saqlain AU - Perveen, Najma AU - Yousaf, Nawal Rehman AU - Akhtar, Saima PY - 2023/05/02 Y2 - 2024/03/29 TI - Impact of Innovation on Economic Growth of G8 Countries- Analysis Over 1996-2020 JF - International Journal of Professional Business Review JA - J. Professional Business Review VL - 8 IS - 5 SE - Articles DO - 10.26668/businessreview/2023.v8i5.1403 UR - https://openaccessojs.com/JBReview/article/view/1403 SP - e01413 AB - <p><strong>Purpose:</strong> The study aimed to analyze the relationship between innovation and economic growth in the G8 countries over the period 1996-2020.</p><p> </p><p><strong>Theoretical framework: </strong>The theoretical framework id built upon the neo-classical growth theory, endogenous growth theory, and the innovation systems approach.</p><p> </p><p><strong>Design/methodology/approach: </strong>The research used the Vector Auto Regression (VAR) model and penal regression, and found evidence of a positive and significant relationship between innovation and economic growth through the results of the Johansen co-integration test. The Granger causality Wald test also indicated that lgdp (GDP) Granger causes irrd (research and development), ipan (patent application), lpar (participation rate), lhte (high-tech exports), lede (educational expenditure), and istj (scientists and engineers), with strong evidence against the null hypothesis.</p><p> </p><p><strong>Results:</strong> The test results presented in the table provide information on the rank of the co-integrating relationships. The maximum and minimum values of the trace statistics and eigenvalues are reported at each rank, along with the critical values at 5% and 1% significance levels. Granger causes the other time series results suggests that lgdp Granger causes irrd (p-value = 0.034), ipan (p-value = 0.005), lpar (p-value = 0.001), lhte (p-value = 0.029), lede (p-value = 0.000), and istj (p-value = 0.000). The p-value for the overall test (lgdp vs. all) is 0.000, indicating that lgdp Granger causes all the other time series.</p><p> </p><p><strong>Findings: </strong> The fixed effects regression model showed a significant relationship with an F-statistic of 2.54 and a corresponding p-value of 0.0218. The study provided policy recommendations to support innovation-led economic growth in the G8 countries.</p> ER -