Effects of Innovation and Social Capital on Economic Growth: empirical Evidence for the Brazilian Case

Abstract

Technological innovation is an important mechanism for increasing productivity that provides growth and economic development to countries and regions. Recognized its effect, incentives for innovation and Research and Development  (R&D) expenditures, the main input for innovation, were intensified in the first decade of the 2000s in Brazil, through laws and programs directed to specific sectors such as: the Innovation Law (2004) and Lei do Bem (2005), both with the aim of stimulating R&D. Therefore, the present work makes use of a model that incorporates the innovation, aiming to evaluate its effects on the GDP. Given the importance of cooperations and collaboration networks to increase productivity, in a complementary way, the effects of social capital on Brazilian economic performance are analyzed. With a database composed of 297 observations analyzed between 2000 and 2010 for each federation unit, including the Federal District, this work uses the traditional panel data and dynamic panel method to measure the increase in the state GDP that these variables provided in the period. The results found point to a significant and positive effect of social capital and to non-significance of innovation. In addition, as evidenced by the literature, human capital is the main factor of increase of the Brazilian product.