Is knowledge spillover from human capital investment a catalyst for technological innovation? The curious case of fourth industrial revolution in BRICS economies

Abstract

The issue of knowledge spillovers, and technological innovation has received immense importance, particularly in the Fourth Industrial Revolution. In this context, this endeavor to carry out this study aims to empirically examine the determinants of technological innovation of Brazil, Russia, India, China, and South Africa (BRICS) countries, using the data that spans from the year 1990 to 2017. Moreover, this study further aims to investigate the role of human capital in mediating the relationship between the spillovers, through imports, foreign direct investment, and the technological progress that will prevail. This study is confined to the employment of the Westerlund (2007) cointegration and augmented mean group (AMG) method for the analysis. The cointegration method outcomes show that there is a stable, long-run equilibrium relationship among the variables in all the five models that have been considered. The results of the AMG method show that in the long run, an increase in the gross domestic product, human capital, research and development expenditures, and the foreign direct investment spillovers, increases the technological innovation in BRICS economies. The results also suggest that an improvement in the human capital strengthens the relationship between technological innovation and the spillovers. Hence, the knowledge spillovers and the developed human capital are more likely to affect the total technological innovation.