Analysis of the Relationship between Innovation and Ethipian Economic Growth

Economists all over the world believe and recognize that innovation promotes economic progress. This research examines the relationship between Ethiopian economic growth and innovation. The goal of this article is to see if an economy's innovation potential has an impact on long-term growth in the economy of Ethiopia. The analysis used data from 1987 to 2020 year in the case of Ethiopia, time-sires data and analysis were carried out using ARDL estimates. The study examined a variety of indicators to quantify innovation, including the number of patents, R&D expenditures, education spending, and enrollment ratio. The results provide evidence of a positive relationship between economic growth and innovation (patents, R&D expenditures) as well as human capital (Education enrollment ratio education spending). The result also shows that both labour and capital are directly related to economic growth, though the former plays a significant role while the latter does not. This paper recommdan that the government is committed to R&D and education funding, developing strong institutions, enhancing the academia-industrial linkage as well as implementing a workable science, technology, and innovation policy to bolster and diversify the economy. to encourage them to engage in R&D and education activities, either through reverse engineering or inventing new ones, as this will not only lead to economic growth but also raise the global competitiveness of Ethiopia's economy.