Understanding the Nexus of R&D, Innovation and Economic Growth in Nigeria
International Business Research
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
... 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.