Abstract:
Nowadays, innovation considered as the most important factor, which can affect economic growth extraordinary. Therefore, investigating the effect of variables affecting innovation has priority. In this study, we try to investigate 1) the natural resource curse hypothesis and 2) the effect of institutional quality on the way in which natural resources affects innovation. To investigate these goals, we choose countries that categorized as the efficiency-driven based on the global competitiveness report (2017) during the period 2011-2016 and use GMM estimator to estimate the model. The results show that while the effect of natural resources on innovation is negative in those countries, which confirms the resource curse hypothesis, but the impact of natural resources interaction with institutional quality is positive. These results emphasizing the importance of institutional quality as a groundwork for the way in which other variables can be effective.
Machine summary:
First, investigating the effect of natural resources on innovation through institutional framework is not considered by the similar studies.
However, based on the study of Welsch (2008), natural resource abundance had an inverse effect on innovation in 77 countries in the period 1965-1998.
The negative effect of natural resources on innovation is obvious from the above studies.
Based on the study of Welsch (2008) and Papyrakis and Gerlagh (2005) we expect the negative effect of this variable on the innovation process.
Based on the discussion of Olsson (2000), improvement in the institutional quality improved the impact of natural resources on the innovation process.
Based On the discussion of Auty (1994), Sachs and Warner (1995, 1997, 1999a, 1999b), Leite and Weidmann (1999), Rodrigueze and Sachs (1999), Gylfason (2000, 2001a, 2001b, 2008) the effect of natural resources on economic growth is negative through the negative impact of this variable on the production factors, such as human capital, social capital, innovation, etc.
As it is clear, in all the estimations the effect of natural resource rent on innovation through different kinds of governance aspects is positive and significant.
The results of our study show a negative effect of natural resource rent on Innovation in efficiency-driven countries that confirm the resource curse hypothesis.
This result emphasizing the importance of institutional quality on the effect of natural resource rent on the innovation process.