Innovation, Entrepreneurship and Economic Growth: The Moderating Role of Corruption

Abstract

This primary goal of this study is to investigate the relationship between economic growth, entrepreneurship, and innovation while underlining the moderating effect of corruption, especially in the context of the BRICS countries (Brazil, Russia, India, China, and South Africa).  Multiple hypotheses are tested through a panel data framework using a Random Effects Generalized Least Squares (GLS) regression model. The study incorporates interaction terms to assess the moderating impact of corruption on innovation- and entrepreneurship-led growth. Data were compiled from World Bank, Global Innovation Index, Global Entrepreneurship Monitor, UNCTAD, and IMF for the period 2010–2023. The results reveal that education and political stability are key drivers of economic growth, showing consistent positive effects. In contrast, innovation has a significant negative association with GDP per capita, suggesting structural or absorptive inefficiencies in the region. Entrepreneurship shows a positive but statistically insignificant effect, and corruption does not significantly moderate the relationships between innovation or entrepreneurship and growth. The findings suggest the need for BRICS nations to enhance institutional quality, improve innovation diffusion mechanisms, and strengthen entrepreneurial ecosystems. Policymakers should consider institutional reforms and investment in education to maximize growth returns from innovation and entrepreneurship. This study builds on the Schumpeterian growth theory and explores Drucker’s perspective on the innovation–entrepreneurship nexus, extending prior models by incorporating corruption as a moderating institutional factor. Unlike prior studies that focus on developed economies, this paper contributes a novel empirical analysis of emerging markets using both traditional economic variables and institutional indicators.

Keywords: Entrepreneurship, Corruption, Innovation, Economic Growth, BRICS, Institutions,

Schumpeter, Drucker.