Spillover effects of innovation and entrepreneurial activity on income inequality in developing countries: A spatial panel approach

Abstract This paper investigated the spatial effects of innovation and entrepreneurial activity on income inequality 64 middle‐and‐low‐income countries 25 high‐income from 2000 to 2016. Spatial panel methods are used address issues dependency spillover among neighboring countries. We find following: (1) Evidence correlations in across (2) A positive direct effect between but a feedback innovation. (3) The relationship is mixed. if proxied by self‐employment negative measured entry rate. Both produced effect, which suggests that linked rising developing (4) self‐employment. also whether linkages innovation–inequality activity–inequality subject country‐level institutional quality. findings suggest interaction terms have inequality. For policy implications, sharing should be encouraged reduce monopoly power increases tendency for wealth accumulation. Another possible solution increase activities while reducing governments offer various schemes targeted at poor, especially finance.