Innovation, structural change, and inclusion. A cross country PVAR analysis

Saha, Amrita and Ciarli, Tommaso (2018) Innovation, structural change, and inclusion. A cross country PVAR analysis. Working Paper. SPRU Working Paper Series, University of Sussex.

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Abstract

Structural change can be both, a cause or a consequence of innovation, while structural change and innovations are usually accompanied by short-term outcomes of social inclusion or exclusion. Inclusion may in turn have an impact on further innovations. Yet, we find little evidence in the literature on the three-way relations between innovation, structural change and inclusion. This paper advances a first exercise in this direction. Given the multidimensionality of each (innovation, structural change, and inclusion), we extract the underlying unobserved common factor structure from various well-known macro indicators. With a structural vector auto regression (SVAR) model for a short panel of developing countries over 13 years, we nd the following main results. First, we con rm the virtuous cycle between innovation and structural change, aligning with existing literature. Second, the strongest result is the positive effect of inclusion on both innovation and structural change, that suggests policy to improve inclusion beyond poverty and inequality. Third, on decomposing the innovation index (formal, firm-level and ICT), we find each related differently to both structural change and inclusion, that suggests specific policy roles in their infl uence on inclusion and structural change.

Item Type: Reports and working papers (Working Paper)
Keywords: Innovation; structural change; inclusion
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit > SPRU Working Paper Series
Subjects: H Social Sciences > HC Economic history and conditions > HC0079 Special topics, A-Z > HC0079.E5 Environmental policy and economic development. Sustainable development Including environmental economics
H Social Sciences > HC Economic history and conditions > HC0079 Special topics, A-Z > HC0079.T4 Technological innovations. Technology transfer
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Depositing User: Tommaso Ciarli
Date Deposited: 19 Mar 2018 17:38
Last Modified: 13 Jul 2018 08:51
URI: http://sro.sussex.ac.uk/id/eprint/74461

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Project NameSussex Project NumberFunderFunder Ref
Pathways to Inclusive Development through Innovation, Technology and Structural ChangeUnsetInter- national Development Research Centre (IDRC)Unset
ISIGrowth: Innovation-fuelled, Sustainable, Inclusive GrowthG1610EUROPEAN UNION649186