Impacts of Voice and Accountability upon Innovation in Pakistan: Evidence from ARDL and Maki Cointegration Approaches

Abstract

Innovative capacity has a decisive and crucial role in determining who is prospering in the global arena. Innovation is crucial for value creation, high productivity, economic growth, employment, and sustainable development that benefit the consumers, firms, businesses, and economy as a whole. Several institutional, political, and social conditions lead to different responses of innovation. For instance, low voice and accountability may lead to low institutional setting, cronyism, and favoritism in allocation of resources, which can harm innovation. Similarly, the terrorist attack of 9/11 caused horrific scales of destructions, which caught the countries on various fronts such as economic, political, and technological. Further, sound infrastructure and savings rates are essential to enhance innovation. Applying the ARDL approach to cointegration, this study investigates the impact of voice and accountability, terrorism, infrastructure, and savings on innovation in Pakistan. The empirical evidence shows that low voice and accountability and terrorism have adverse impacts on innovation in the short- and long-run periods. Further, findings reveal that inadequate infrastructures and low savings adversely affect the innovation in both periods. Various robust checks such as Maki cointegration, Johansen cointegration test, fully modified ordinary least square, dynamic ordinary least square, and canonical cointegration regression corroborate the results. The findings of the study would be of substantial implications for government and policymakers.

Innovation and Sustainable Development: Does Aid and Political Instability Impede Innovation?

“…The coefficient of terrorism shows that increase in terrorism causes innovation to decrease in the short run and the long run. The results are in line with the findings of (Nadeem, Jiao, et al, 2020). The possible explanation of the findings are as follows.…”

“…Besides, it provides reliable results for both the short-run and the long-run periods. Furthermore, this econometric technique is suitable for small sample size (Nadeem, Jiao, et al, 2020) and separately calculates the short-run and long-run results. The ARDL methodology allows to produce empirical findings for an individual country and facilitates country-specific discussions and policy implications.…”

“…However, if the computed value of F-statistic falls between UCB and LCB, the cointegration among variables is undecided. In such a situation, scholars report that another way to establish cointegration is to test the significant negative lagged error correction term (ECT; Nadeem, Jiao, et al, 2020).…”

“…The importance of infrastructural development cannot be denied for economic development of a country (Nadeem, Jiao, et al, 2020) as it helps a country to attract investors, modern industries, and entrepreneurs because sound infrastructural development facilitates to reduce cost of not only doing businesses but also the transportation and operational costs (Wekesa et al, 2016). Terrorist activities destroy essential properties and infrastructure and increases infrastructure losses in terrorism-prone countries (Aisha & Shehla, 2014;Bano et al, 2019), which could hinder market, business, economic, financial, and entrepreneurial activities in such countries.…”

Renewable Energy, Financial Development and Real Per Capita GDP Growth in African Countries1

“…Regulatory quality is used as a metric of institutional quality because e cient policy formulation promotes the development and of the private sector and encourages private sector investment. Moreover, voice and accountability is also adopted in this study as an institutional quality metric because it also incorporates military participation in democracy and politics which increases corruption and reduces con dence of investors and capital in ow (Nadeem et al, 2020).…”