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Validating the dynamic relationship between technological innovation and economic growth in Malaysia

Author

Listed:
  • Hussain Ali Bekhet
  • Nurul Wahilah Abdul Latif

Abstract

Technological innovation is a dynamic growth factor to achieve sustainable development. This study aims to explore the long- and short-run relationship between technological innovation and Malaysia's sustainable growth from 1980 to 2015. Augmented Cobb-Douglas production function is used to scale the technological innovation and economic growth link. The F-bounds test and VECM Granger causality are employed. The dynamic relationships among the gross domestic product, capital, employment, electricity consumption, technological innovation, technological innovation squared and governance institution quality variables; and the nonlinear relationship between technological innovation and economic growth are studied. The study confirms the existence of long-run relationship among the variables and the link between technological innovation and economic growth has an inverted U-shape. Also, technological innovation, technological innovation squared, and governance institution quality Granger-cause economic growth in the long and short run, together with capital, employment and electricity consumption. Therefore, continuous plans and policies are very much needed to drive technological innovation evolution in Malaysia, so the tide is slowly turning.

Suggested Citation

  • Hussain Ali Bekhet & Nurul Wahilah Abdul Latif, 2019. "Validating the dynamic relationship between technological innovation and economic growth in Malaysia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 11(3), pages 185-214.
    • Handle: RePEc:ids:ijtlid:v:11:y:2019:i:3:p:185-214
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