The Interaction of Globalization and Innovation on Total Factors Productivity in Selected Science Producing Countries

Undoubtedly, one of the ways to realize the knowledge-based economy is to improve the Total Factors Productivity through the expansion of innovative activities and the absorption of the hidden knowledge in imported technologies. What facilitates this process is the appropriate institutional quality and the targeted use of globalization capacity in different dimensions. In this regard, this research, with the approach of panel data and the Method of Generalized Moments (GMM), investigates the mutual effect of globalization and innovation on the productivity of the total factors in two groups of selected science-producing countries with per capita income above 20 thousand dollars and selected countries Science producer with low per capita income paid $20,000 during 2011-2019 period. The results show that the mutual influence of globalization and innovation have had a positive and significant effect on the productivity of the total factors in both groups of selected countries with different estimated coefficients. The same is the case with the effect of the control variables of economic incentives and institutional regime and training and development of human resources, while control variable of economic freedom has a positive and significant effect on the total factor productivity index in selected science producing countries with high per capita income and in selected science producing countries with low per capita income. According to the findings of the research, it can be said that globalization by itself cannot be considered as a factor in improving the productivity of factors. Rather, the targeted use of human capital capacity in the context of appropriate institutional quality can benefit from the positive benefits of globalization and economic freedom in order to improve the productivity of all factors.