Understanding the Nexus of R&D, Innovation and Economic Growth in Nigeria

Abstract

R&D and Innovation activities, which lead to technological progress, are considered as important factors contributing to stable and continuous economic growth. Total Factor Productivity accounts for the proportion of economic growth that is not captured by labour and capital inputs, and is measured by R&D and innovation in this paper. The paper investigates the impact of R&D and innovation, labour and capital on economic growth in Nigeria using Least Square Method. The result of the thirty one (31) years reviewed shows that Gross Expenditure on R&D (GERD) has significant impact on economic growth. The coefficient of R&D which is negatively related to economic growth implies that it is not enough to increase spending on R&D and innovation when there are weak institutions, high corruption practices, low interaction between the academia and the industry, uncoordinated industrial clusters, among others. The result also shows that both labour and capital are directly related to economic growth, though the former plays a significant role while the latter does not. This paper concludes that government must be committed to R&D and innovation funding, developing strong institutions, enhancing the academia-industrial linkage as well as implementing a workable science, technology and innovation policy in order to bolster and diversify the economy. Government should also provide various fiscal incentives for the industrial firms in their various clusters so as to encourage them to engage in R&D and innovation activities, either through reverse engineering or inventing new ones, as this will not only lead to economic growth but also raise the global competitiveness of Nigeria.

Empirical analysis of inbound open innovation and SMEs performance: Evidence from oil and gas industry

“…A firm that fails to innovate in its competitive environment will definitely be pushed out of the market (Adelowo, Akinwale & Olaopa 2017;Akinwale et al 2012). Therefore, innovation becomes an arrow that drives productivity in all sectors of the economy (Kim 2011).…”

Innovation and knowledge transfer in Nigeria

“…The country's gross expenditure on R&D (GERD) is relatively insignificant when compared with the R&D expenditure profiles of the advanced countries in the USA, Europe and some parts of Asia. In addition to this, the national R&D capabilities have been undermined by underfunding (Akinwale et al, 2012b). There also exists a weak interaction among the key actors of the NIS in the country as earlier stated (Aju, 1994;Oyebisiet al, 1996;Oyewaleet al, 2008).…”

“…There also exists a weak interaction among the key actors of the NIS in the country as earlier stated (Aju, 1994;Oyebisiet al, 1996;Oyewaleet al, 2008). According to Akinwale et al (2012b), the industrial firms in Nigeria have not been making effective use of the inventions/research results of Nigerian research institutes, as they tend to have little to do with these institutes. As a result of little R&D activities in the business sector in Nigeria unlike developed nations, government funds over 95% of the R&D activities with developmental research accounting for only 26.1% of the entire research activities in Nigeria (AIO, 2010).…”

The influence of culture and transparency on global research and development intensity: An overview across Europe

“…Although the complex relationships between R&D and subsequent economic benefits, if efficiently and productively used, R&D can serve as a major source of competitive advantage (Chen et al, 2011). According to Akinwale, Dada, Oluwadare, and Jesuleye (2012), it is not enough to increase the expenditures on R&D and innovation when countries have weak institutions and networks, and poor coordination systems. Building a creative high performance R&D culture is required.…”