This study aims to further build on earlier researchers conducted by the authors and provide a quantitative model on innovation related variables. For this purpose, top ranked countries on OECD innovation index are involved. In relation with the developments in the global economy and increasing completion, the interest towards innovation is continuously increasing. Innovation which contributes to economic growth towards increasing the productivity and competitive power is evaluated as factor which effects the direction of economic activities worldwide. In the global market where competitiveness has greatly increased, being innovative became vital both for companies and the countries. Panel data analysis is utilized to investigate the relationship between the innovation index developed by OECD as the dependent variable and four independent variables; real net national income, labour productivity, investment, and R&D expenditure. In order to control network effects as well as the endogeneity of variables, the Arellano–Bond dynamic panel estimation is adopted.
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