Role of Trade, FDI and IPR in Stimulating Innovation and Economic Growth: A Panel Data Study for the Selected South Asian Economies

Abstract

This study examines the importance of high-tech trade, intellectual property rights and foreign direct investment in determining the rate of innovation and economic growth in the selected South Asian countries. By following the endogenous growth models, the study assesses the role played by domestic innovation and foreign innovation in promoting economic growth. By using FullyModified Least Square Estimation technique and panel data of Bangladesh, India, Pakistan and Sri Lanka for the period 1980-2015, the results show that the determinants of innovation; human capital, infrastructure, R&D expenditure, and GDP per capita, play a very important role in encouraging innovation activity in the South Asian countries. FDI and high-tech imports from developed countries crowd-out domestic innovation. The impact of IPR on innovation turns out to be inconclusive. The results from the growth regression support the endogenous growth theory and innovation-led growth model, displaying the importance of both foreign and domestic innovation in stimulating economic growth in the South Asian countries.