Innovation as an accelerating effect on Gross Domestic Product (GDP) per capita

Abstract

Most economists agree that innovation is a key driver of economic growth, prosperity and human well-being. Patents are an important indicator of innovation output. This study aims to investigate the relationship between patents as an innovation output and Gross Domestic Product (GDP) per capita as an economic welfare. In the study 166 countries were analyzed and a high positive correlation between patent grants per million population and GDP per capita as 0.804. The inequality in income distribution in the world is also clearly seen in the distribution of patent grants. High-income countries have 61 percent of global income whereas they have 66.9 percent of total patent grants in the world. Low-income countries have 0.5 percent of global income whereas they have 0.3 percent of total patent grants in the world. Global average patent grants per million population is 221.3 in 2020. Patent grants per million population is 943.6 in high-income countries and 8.6 in low-income countries. Test results show that, the natural logarithm of patent grants per million population increase 10 percent, it causes approximately 4.1 percent increase in natural logarithm of GDP per capita. In other words, if patent grants per million population in the world increase 23.3, it causes approximately 523.1 USD increase in global GDP per capita in average.