The Impact of Innovation on the Pakistan Economy Measuring through Performance/Portfolio Innovation Index

Innovation plays pivotal role in economic development. Several proxies’ exports of high technology, manufacturing sector share in GDP, ICT goods exports, R & D spending, employment population ratio, capital formation (gross), tertiary enrollment rate, poverty rate and unemployment rate are selected from numerous literatures that plays key role in growth of economy and contributes in promoting the innovation activities as well. The study has used the time series data which covers the period from 1985 to 2016. Econometric techniques ARDL and GMM E-views tests suggested by Unit root test are applied on these variables by dividing it into two indices: input indices and output indices which give positive results of having long run relationship with GDP. Moreover Performance/ portfolio innovation index is calculated by taking above proxies as base variables by the method used by Purdue centre of R&D, USA (2009). Results revealed that Pakistan strongly needs to enhance its innovation capacity to accelerate growth level of its economy