The Effects of Human Capital and Social Capital on Innovation in Selected OPEC Member Countries: Panel ARDL Approach

The amount of innovation has a fundamental and tremendous impact on the economic growth and development of a country, which has caused most researchers and policymakers to pay attention to creativity and innovation as a new solution for development. For this reason, several studies have been conducted in relation to the factors affecting innovation at the micro level (companies and enterprises) and at the macro level (at the level of different countries and regions). Therefore, the purpose of this study is to investigate the effects of human capital and social capital on innovation in selected members of OPEC countries, including Iran, Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates during 2012-2021 using the Panel ARDL approach. The results of the model have shown that in the short term, among the variables, only two variables, human capital (HC) and Research and Development (R&D), have a positive and significant effect on the global innovation index in the short term, and other variables in the short term have not a significant effect on the innovation index of countries. Also, the examination of the long-term coefficients of the variables shows that human capital, social capital, gross domestic product and research and development expenditure have a significant and positive effect on the global innovation index in countries. Therefore, it is suggested that increasing human capital and research and development expenses should be prioritized in short-term planning for the innovation index in society. Also, government spending should be increased in sectors that have high innovation potential and capacity in those sectors.