Template-type: ReDif-Paper 1.0 
Author-Name: Al Raee, Mueid
Author-Email: alraee@merit.unu.edu
Author-workplace-name: UNU-MERIT, and Maastricht University
Author-Name: Ritzen, Jo
Author-Email: ritzen@merit.unu.edu
Author-workplace-name: UNU-MERIT, and Maastricht University
Author-Name: Crombrugghe, Denis de
Author-Email: d.decrombrugghe@maastrichtuniversity.nl
Author-workplace-name: School of Business and Economics, Maastricht University
Title: Innovation policy & labour productivity growth: Education, research & development,
	 government effectiveness and business policy
Abstract: This paper examines the relationship between labour productivity growth in
	 non-traditional sectors and "innovation policy" for a cross-section of countries.
	 Innovation policy is characterised by investments in tertiary education and
	 research and development as a percentage of Gross Domestic Product (GDP),
	 the freedom in the business environment, as well as overall government effectiveness.
	 Our results confirm the economic convergence between richer and poorer countries.
	 We could show a significant positive effect of the interaction between government
	 effectiveness and government expenditures in tertiary education as a percent of GDP
	 on labour productivity growth in non-traditional sectors. Also, for developing countries,
	 a positive and significant relationship between the growth variable and effective
	 research and development expenditures was observed. We could not uncover a
	 relationship between other innovation policies and labour productivity growth.
	 Non-traditional sector labour productivity growth in the oil-rich Arabian Gulf countries
	 was observed to be consistently slower than Western countries. Higher oil prices
	 appear to crowd out innovation in oil-rich countries while stimulating innovation in
	 oil-importing countries. 
Keywords: Innovation policy, labour productivity growth, technological change, government
	 effectiveness, developing countries, Arabian Gulf countries. 
Classification-JEL: O38, O43, O47
Series: UNU-MERIT Working Papers
Creation-Date: 20170404
Number: 2017-019
File-URL: https://unu-merit.nl/publications/wppdf/2017/wp2017-019.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2017019