The Effect of Economic Policy Uncertainty on Innovation in Selected OPEC ‎Countries: Spatial Econometric Approach

Innovation in a region or country is influenced by many variables. One of these variables is the uncertainty in the economic and political environment in that region and country. Based on this, the aim of this study is to investigate the effect of global uncertainty (including economic and political uncertainty) on the level of innovation in selected OPEC member countries, including Iran, Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Algeria, Nigeria, and Ecuador in the period of 2011- 2022. To estimate the relationship between the variables, the econometric model of the Spatial Durbin Model (SDM) has been used to examine the spatial and indirect effects in addition to the direct effects. The results of the model estimation showed that the global uncertainty variable had negative and significant direct and domestic effects on the level of innovation in these countries. Also, the spatial and indirect effects of this variable have been negative and significant on the innovation rate of countries. Two variables, the amount of facilities granted by banks to the private sector and the corruption control index had positive and significant direct effects. The indirect and spatial effects of these two variables are negative and significant.