The role of R&D and innovation on income inequality: A study with discriminant analysis
Ayşe Meriç Yazıcı*
Department of International Trade and Business, Istanbul Gelişim University, Istanbul, Türkiye *
Abstract: This study examines the role of Research and Development (R&D) and innovation on income inequality using discriminant analysis, a multivariate statistical method. The main objective of the study is to assess how well R&D and innovation components can classify income inequality (or development) in different countries. The independent variables include ‘Industrial Design Applications (IDAPPNR)’, ‘Patent Applications (PAPPNR)’ and ‘Trademark Applications (TRAPPR)’, while the dependent variable is represented by the Gini index, which measures income inequality and serves as a proxy for a country's level of development. Using data from 2021 onwards, the study categorises countries into two groups according to their Gini index values: high inequality/underdeveloped and moderate inequality/developing countries. The analysis takes into account the statistical requirements of normal distribution, homogeneity of variance-covariance matrices, outliers and multicollinearity. The results obtained from the discriminant analysis show that the independent variables, especially patent applications and trademark applications, make a significant contribution in distinguishing between the two groups. The findings suggest that countries with higher levels of R&D and innovation tend to show lower income inequality, reflecting more developed economies. This study highlights the potential role of R&D and innovation as key drivers in reducing income inequality and promoting sustainable economic development.
Keywords: Research and development (R&D), income inequality, innovation, discriminant analysis, gini index.
