Measuring the Impact of Knowledge Capital on National Innovation Performance

Abstract

This study examines the effect of knowledge capital on innovation performance of OECD countries using a panel approach. In this study, we quantified national knowledge capital by construing an overall index that includes human capital, R&D spending, and active patents. For the period 2010 to 2020, we determined the relationship between the composite index and the Global Innovation Index (GII) using fixed effects panel regression to measure the innovation performance of the countries in the study. The results document a strong positive relationship between knowledge capital and national innovation performance, emphasizing the importance of knowledge-based resources for innovations. This work enhances the understanding of innovation empirically and provides useful guidance to policymakers targeted towards improving national competativeness.