Innovation, Total Factor Productivity (TFP) and Economic Growth In Indonesia: ARDL Bound Test Approach


  • Fajar Wijaya Universitas Hasanuddin, Indonesia
  • Rahmatia Rahmatia Universitas Hasanuddin, Indonesia
  • Nur Dwiana Sari Universitas Hasanuddin, Indonesia



Innovation, TFP, economic growth, Indonesia


This study aims to examine the cointegration relationship between innovation, TFP, and Indonesia's economic growth. The data used is secondary data in the form of a time series with a range of 1978–2019 sourced from WDI and PWT 10.0. The estimation technique uses the ARDL Bound Test Cointegration method. Empirical findings show that in the long term, innovation and TFP have a positive and significant influence on Indonesia's economic growth. In the short term, it is found that GDP lag-1, TFP, and trends have positive implications for driving Indonesia's economic growth. The balance of adjustments in the long term is shown from the ECT value, and based on the bound test, it is found that there is a long-term cointegration relationship.


Barro, R., & X, S.-i.-M. (2004). Economic growth. Cambridge: MIT Press.

Benhabib, J., & Spiegel, M. M. ( 2005). Chapter 13 Human Capital and Technology Diffusion. Handbook of Economic Growth, 935–966. doi:10.1016/s1574-0684(05)01013-0.

Daude, C. (2010). Innovation, Productivity and Economic Development in Latin America and the Caribbean. OECD Development Centre Working Papers, No. 288, OECD Publishing, Paris,

Pesaran, M., & Shin, Y. (1999). An autoregressive distributed lag modeling approach to co-integration analysis. Chapter 11. In: Strom S (ed) Econometrics and economic theory in the 20th century: the Ragnarfrisch centennial symposium. Cambridge University Press.

Pesaran, M., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. J Appl Econ 16(3):289–326.

Pradhan, R., Arvin, M., Hall, J., & Nair, M. (2016). Innovation, financial development, and economic growth in Eurozone countries. Appl Econ Lett 23(16):1141–1144.

Romer, P. (1990). Endogenous technological change. J Polit Econ 96:S71–S102.

Romer, P. (1986). Increasing returns and long-run growth? J Polit Econ 94:1002–1037.

Solow, R. (1956). A contribution to the theory of economic growth. Q J Econ 70:65–94.

Solow, R. (1957). Technical change and the aggregate production function. Rev Econ Stat 39:312–320.

Zhang, J., Jiang, C., & Wang, P. (2014). Total factor productivity and China's growth miracle: An Empirical Analysis. SSRN. https://

Grossman, G., & Helpman, E. (1990). Trade, Innovation and Growth. The American Economic Review, 86-90.

Schumpeter, J., & & Backhaus, U. (2003). The Theory of Economic Development. The European Heritage in Economics and The Social Science, Vol. 1(Springer, Boston, MA).

Aghion, P., & Howitt, P. (1990). A Model Of Growth Through Creative Destruction. National Bureau Of Economic Research(Working Paper No. 3223).

Seenaiah, K., & Rath, B. (2018). Does Innovation Matter For Total Factor Productivity Growth In India? Evidence From ARDL Bound Testing Approach. International Journal Of Emerging Markets(Emerald Insight).

Saleem, H., Shahzad, M., Khan, M., & Khilji, B. (2019). Innovation, Total Factor Productivity, and Economic Growth In Pakistan: A Policy Perspective. Journal Of Economic Structures(Springer).

Galindo, M., & Picazo, M. (2013). Innovation, Entrepreneurship, And Economic Growth. Management Decision, Vol. 51 No. 3(Emerald), 501- 514.

Osorio, B., & Pose, A. (2004). From R&D To Innovation and Economic Growth In The UE. Growth And Change, Vol. 35 No. 4, 434-455.

Guloglu, B., & Tekin, R. (2012). A Panel Causality Analysis Of The Relationship Among Research And Development, Innovation And Economic Growth in High-Income OECD Countries. Eurasian Economic Review(Department Of Econometrics, Pamukkale University, Turkey), 32- 47.

Pecea, A., Simonab, O., & Salisteanuc, F. (2015). Innovation And Economic Growth: An Empirical Analysis For CEE Countries. Procedia Economics And Finance(Elsevier), 461-467.

Mankiw, N. (2010). Intermediate Macroeconomics.




How to Cite

Wijaya, F. ., Rahmatia, R., & Sari, N. D. (2023). Innovation, Total Factor Productivity (TFP) and Economic Growth In Indonesia: ARDL Bound Test Approach. International Journal of Economics Development Research (IJEDR), 4(3), 746–758.