Determinants of Innovation in Developing Countries: A Panel Data Analysis

Yuyun Muktiana; Naura Lintang Eka Sabillah; Muhammad Raditiya Ramadhani

Authors

Yuyun Muktiana Universitas Negeri Surabaya
Naura Lintang Eka Sabillah Universitas Negeri Surabaya
Muhammad Raditiya Ramadhani Universitas Pendidikan Ganesha

Keywords:

Innovation, Developing Countries, Panel Data

Abstract

The paper investigates how education, research and development expenditure, foreign direct investment, trade openness, infrastructure, institutional environment, and digital access determine innovation in 23 developing countries between 1996 and 2022. We applied a Fixed-Effects model with robust standard errors for panel data analysis, accounting for heteroskedasticity and autocorrelation. All variables were transformed into natural logarithms to facilitate the interpretation of elasticity. The Findings indicate that education, R&D expenditure, FDI, trade openness, and strong institutions positively and significantly influence innovation. This study provides empirical evidence that digital access and infrastructure may inhibit rather than foster innovation when countries lack adequate absorptive capacity and institutional readiness.

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