The effect of national intellectual potential on economic development: A comparative analysis

In recent years, literature has emerged that evaluates firms' and nations' production and growth potential, which cannot be explained solely by labor and capital, from a new perspective as intellectual capital. The novelty of this field, combined with the absence of a universally accepted academic or institutional index for calculations, has led to numerous indices in which scholars generally assess elements such as human capital, market, processes, and innovation using various components. In Islamic economics, development should be pursued with a balance between material and spiritual aspects. National intellectual capital approaches, which are typically rooted in the intellectual capital framework used at the firm level, aim to assess the future situations of countries regarding productivity, growth, and development. These approaches use a range of both tangible and intangible indicators to achieve their goals. GDP, which typically reflects only the material dimension, is the dependent variable in this context. This study examines traditional methods for calculating intellectual capital and introduces a new index incorporating Islamic moral and ethical components alongside existing index elements. Instead of using productivity as a reference concept, this new index refers to barakah. This index has been named the National Intellectual Potential Index. The National Intellectual Potential Index consists of 36 components, divided into four equal categories: National Human Potential, Market Potential, Process Potential, and Renewal Potential, with nine components in each category. The variables that depend on the index are known as the Welfare Index. The Welfare Index comprises two equal-weighted components: National Peace Potential and the Material Dimension. National Peace Potential shall have nine components, while GDP represents the Material Dimension. The analysis was conducted for 46 countries using annual data from 2013-2022. A panel data model was employed in the STATA package program. Country rankings were established by evaluating the influence of independent variables on dependent variables within this framework. The data underwent a normalization process using the min-max method. The Welfare Index was identified as the dependent variable, while its effects on National Peace Potential and the Material Dimension were analyzed separately to facilitate comparisons. The panel least squares method was employed to investigate the relevant correlations. The results show that the National Intellectual Potential Index has a positive and statistically significant effect on the Welfare Index, National Peace Potential, and Material Dimension. In ranking 46 countries according to their average scores, Western European countries are seen to be at the top. There are no significant differences in the country rankings regarding the Welfare Index, National Peace Potential, and Material Dimension. Malaysia, Indonesia, Türkiye, and Kazakhstan, analyzed as OIC member countries, do not have very high ranks. Malaysia has a relatively better average score. The National Intellectual Potential Index has been compared with the Islamism and NIC Index to examine their similarities. The rankings of countries vary depending on the results of these indexes. Notably, the NIC Index yielded significantly different outcomes, while the results from the Islamism Index were relatively closer. This variation suggests that in this study, which aims to measure National Intellectual Potential based on Islamic economics, the scores of countries differ depending on the chosen indicator.