The Entrepreneurship, Knowledge Spillover and Economic Growth

Abstract

The purpose of this study is to test the knowledge spillover channel and introducing the Innovation as a channel for Knowledge spillover. Endogenous growth theory assumes that the knowledge spillover occur directly and lead to economic growth. In this paper, we suggest that the spillover of knowledge may not occur automatically as typically assumed in models of endogenous growth. We propose a model by incorporating the new variable based on the patent data to proxy for productive innovation. The empirical model estimated using a panel of data from 60 developed and developing selected countries for the period of 1990 to 2011. The empirical results provide evidence that in addition to measures of research & development and human capital, innovation also serves to promote economic growth. On the other hand innovation is identified as one such mechanism facilitating the spillover of knowledge.