The relationship between technology, innovation and economic growth: An investigation of high and upper middle income countries

Technological developments have economic and political consequences. The level that the humanity reached and the prosperity that is achieved today have occurred in the light of the developments that took place in technological realm. This has also had significant impact on inventions and innovations. As well as the commercially sponsored ones, the publicly funded research and development laboratories play a crucial role in technological progress. This research, investigates the interplay between the technological innovations and profitability and economic growth. Placing the role of institutions, technology diffusion and catching up and convergence of countries at the central of the analysis, the research aims at examining the concepts of Geography Hypothesis, Culture Hypothesis and Ignorance Hypothesis to explain the income inequality between countries. The role and the concept of technology are discussed in the context of Neoclassical Growth Theory, Endogenous Growth Models and Evolutionary economics theory. In this framework, the importance of the public sector, universities, research institutions and science parks are also emphasized. Furthermore, comparing the selected countries' technology and innovation policies, it produces policy recommendations for Turkey. In this study, the relationship between innovation indicators and economic growth examined for selected high income and the upper-middle income group countries utilizing Panel FMOLS method and Dumitrescu and Hurlin (2012) Panel Casuality Test for the period of 1999-2014. The Panel FMOLS results indicate that, human capital, share of research and development expenditures, export levels, number of patent applications and foreign direct investment have significant positive impact on economic growth. As a result of the application of the Dumitrescu and Hurlin (2012) Panel Casuality Test, this thesis reveal the that the bidirectional relationship between Gross Domestic Product and Research and Development (R&D); R&D and human capital; R&D and Patents; Export and R&D.