Innovation without an Aggregate SDG Dividend? Evidence on the Level and Balance of Social Progress in Developing Economies
DOI:
https://doi.org/10.63939/JSS.2026-Vol10.N41.196-224Keywords:
innovation; Sustainable Development Goals; inclusive social progress; development; fixed effects; system GMM; SDG synergies; developing economiesAbstract
This study asks a question that is often presumed rather than tested: does greater innovation capacity translate into broad and inclusive progress across the Sustainable Development Goals (SDGs) in developing economies? Using a balanced panel of 43 economies observed annually from 2005 to 2023 (817 country-year observations), the analysis combines an aggregate SDG index with all 17 goal scores, four multidimensional SDG groupings, and a new distinction between the level and the balance of social progress. Innovation is measured primarily by an innovation index and is cross-checked with research-and-development expenditure and high-technology exports. Country fixed effects, year effects, clustered standard errors, extended controls, nonlinear specifications, and two-step system GMM are used to distinguish cross-sectional associations from within-country change. The results overturn the simple innovation-dividend narrative. Innovation is strongly negative in country fixed-effects models that omit common time shocks, but the coefficient collapses to statistical insignificance once year effects are introduced (β = -0.031, p = 0.492) and remains insignificant with extended controls, alternative innovation measures, nonlinear terms, and system GMM. Across the 17 SDGs, only SDG 6 shows a conventional 5% association with innovation, and the sign is negative (β = -0.178, p = 0.028). Innovation is also insignificant for social, productive-economic, environmental, and institutional SDG composites. However, a different pattern emerges when inclusion is defined as balance across core social goals (SDGs 1, 2, 3, 4, 5, and 10): innovation does not raise their average level (β = -0.009, p = 0.939), but it significantly reduces cross-goal dispersion (β = -0.184, p = 0.043). The paper therefore argues that innovation may contribute more to the distribution and coordination of social progress than to its aggregate level. This finding shifts the policy question from how much innovation an economy produces to how innovation systems are directed, governed, diffused, and connected to social objectives
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This work is licensed under CC BY-NC 4.0
