Innovation is considered essential to improving competitiveness and efficiency, thereby promoting economic growth in both theory and practice. This study analyzes the impacts of innovation, measured by the number of researchers, and the number of patents and trademarks, on economic growth. The results represent issues for consideration by policymakers dealing with sustainable economic growth. Besides the literature review, an empirical analysis was undertaken using the two-step system Generalized Method of Moments (GMM). Research data was collected through the World Bank"s database, with participants from 69 developed and developing countries between 2006 and 2014. Empirical results show that innovation, together with national openness, foreign direct investment inflows, and government expenditure on education, have directly and positively influenced economic growth. In addition, the study found a positive intermediate role for institutional quality and the spillover effect of foreign direct investment in promoting the relationship between innovation and economic growth. This study suggests that policymakers should focus on improving research and development activities, strengthening economic integration, attracting foreign direct investment, and extensively reforming the institutional environment to facilitate economic development. Contribution/ Originality:This study systematically explores the role of innovation in economic growth under the influence of institutional quality and foreign direct investment, using data from 69 developed and developing countries from 2006 to 2014.

Monetary policy is closely related to activities to achieve economic growth, which eventually gives welfare to the community. This study aims to analyze the description of the transmission flow of financing channels, the effect of monetary policy instruments, and their effectiveness to achieve economic growth. The variables used are Islamic Banking Finance (FIN), return of Sharia Bank Indonesia Certificate (SBIS), return of PUAS, and Industrial Production Index (IPI). This study used Vector Error Correction Model (VECM) to determine short- and long-term relationships using the time series data. First, the result of the study showed that the transmission flow could not be identified clearly, because the flow stopped in FIN, and it could not affect IPI, according to the Granger Causality test. Second, the result of VECM estimation showed that all variables only affected long term period and did not affect the short-term period. Third, monetary policy transmission of Islamic banking financing channel was not effective enough, which was proven with the result of IRF simulation, which showed that the effect of shock on financing channel variable (FIN) towards IPI was subsided and stable in the 10th period later. Meanwhile, the result of the FEVD simulation showed that the financing channel variable (FIN) only gave a contribution of as much as 0.14 percent towards IPI. The contribution and policy implications are also discussed in this study.

Purpose of the study: Innovation is seen as the key to improving quality and productivity, thereby promoting competition and economic growth. This study analyzes the impact of innovation on economic growth through various measures, such as research and development spending, the number of researchers, number of patents as well as trademark registrations. Research results are evidence to recommend policies for intellectual-based economic growth. Methodology: Literature review and empirical analysis conducted in the study. The empirical method is a two-step System Generalize Methods of Moments (GMM), aiming at reliable results. Accessing the World Bank Database, research data from 64 developed and developing countries are collected from 2006 to 2014. Main Findings: The empirical findings show that innovation plays a crucial contribution in promoting economic growth, similar to national openness and government spending on education. This study also finds a positive impact on foreign investment flows and their spillover role in enhancing the correlation between innovation and economic growth. Applications of this study: The findings of this study focus on the contributions of innovation, foreign direct investment inflows, and other macro factors that can be enforced to improve economic growth by policymakers. Novelty/Originality of this study: The study uses different measures of innovation, including inputs such as the number of researchers, research and development expenditure, and outputs as the number of patents and number of trademark registrations. Empirical findings are found consistently, thus confirming that innovation is very important for economic growth. The study also shows convincing evidence confirming the positive contribution of foreign direct investment as well as its spillover effect on innovation and economic growth.