Testing the Effects of Innovation with Empirical Analysis in the Context of Middle Income Trap Strategy

This study aims to measure the effect of innovation to avoid the middle income trap. In this framework, we divided countries into two groups following the work of Robertson and Ye (2013): countries in middle income trap (MIT- Brazil, Mexico, Malaysia and Turkey) and countries avoid the middle income trap (NMIT- South Korea, Portugal, Singapore and Greece). The relationship between "Calculated Innovation Index (HII)" calculated by PCA method and consisting of 27 different innovation indicators and economic growth examined employing Second Generation Panel Data Method. The results show that NMIT countries are more affected by HII than countries in MIT.