Intellectual capital and economic growth: evidence from some selected countries

Abstract

The aim of this study is to explain the output growth across countries as an effect of intellectual capital growth. Defining intellectual capital as an integral of all the various intangibles, it argued to resolve the conceptual complexities and empirical inconsistencies. For this, the study defined the flow of new ideas as a function of change in intellectual capital level. Thus, it developed a model in which broad ideas predetermine the quality of capital and labor necessary for final goods production. The model was estimated using dynamic common correlated effect estimators for a panel of 29 countries from all income levels and geographic regions from 1990 to 2020. The results show a positive and significant contribution of national intellectual capital to economic growth. Hence, policymakers must enhance innovation in all spaces and phases of learning.

Impact statement

The introduction of intellectual capital (IC) to explain economic growth, amidst unceasing complexities in conceptions and modeling intangibles, offers unprecedented significance for academics and policy issues. The concept of IC helps to encompass both technological and social innovation capabilities. Hence, for scholars interested in this field, the approach provides a novel model that explain the rate of flow of new technological and non-technological ideas of a given nation as a function of change in national IC level. This new idea generation function is also safe from ‘scale effect’, an inevitable problem facing all various generations of endogenous models. For economic policy makers the approach could simplify the conceptual complexities and also helps to look for domestic technological and non-technological capabilities before embarking on absorption of frontier technologies.

Keywords:

• Intellectual capital
• economic growth
• innovation
• ideas

REVIEWING EDITOR:

• Aye Goodness, University of Agriculture, Makurdi Benue State, Nigeria

SUBJECTS:

• Economics
• Political Economy
• Economic Psychology

JEL:

• O32
• O36
• O35
• O11
• O50

Authors contribution

Kalalto Gashe, Zerayehu Sime and Melkamu Mada participated in conducting the study. Kalalto Gashe a PhD candidate in development economics had made a substantial contributions in the conception and design; acquisition, analysis and interpretation of data and drafting. Both Zerayehu Sime (PhD) is an associate professor of economics, and an editor-in-chief of EJBE in Addis Ababa University and Melkamu Mada (PhD) is an associate professor of economics from Arba Minch University. Zerayehu Sime and Melkamu Mada had participated in designing and critical revision of the work for important intellectual content. Finally, all the three authors approved the final version to be published and agreed to be responsible for all aspects of the work published.

Data availability statement

The data supporting the findings of this study are openly available in figshare at 10.6084/m9.figshare.22692550 or https://figshare.com/s/645ce6d7d0a15981ad67.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Social comprises ideas or knowledge of innovation in: R&D social sciences, behvioral arts and wisdom, organizational and public management and institutions.