The Impact of Natural Resources on Innovation

Nowadays, innovation considered as the most important factor, which can affect economic growth extraordinary. Therefore, investigating the effect of variables affecting innovation has priority. In this study, we try to investigate 1) the natural resource curse hypothesis and 2) the effect of institutional quality on the way in which natural resources affects innovation. To investigate these goals, we choose countries that categorized as the efficiency-driven based on the global competitiveness report (2017) during the period 2011-2016 and use GMM estimator to estimate the model. The results show that while the effect of natural resources on innovation is negative in those countries, which confirms the resource curse hypothesis, but the impact of natural resources interaction with institutional quality is positive. These results emphasizing the importance of institutional quality as a groundwork for the way in which other variables can be effective.