Innovation and economic growth in Norway

Master's thesis in FinanceIn this paper, I examine how investing in innovation affects economic growth in Norway. I attempt to conduct an empirical study using regression to examine the relationship between investing in innovation using R&D data and economic growth with GDP. The analysis is based on time series data for the period 1970 to 2011, which is accumulated from two well known sources; Statistics Norway and the Norwegian Research Council. The results reveal that not all the assumptions for OLS are met; consequently the relationship between innovation and economic growth in Norway is not confirmed. Several explanations to these results are suggested, and even though the relationship was not empirically confirmed, one still believes in a positive relationship between innovation and economic growt