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1. Introduction
A large body of literature emphasizes the key ingredients of growth such as human capital, innovation and technological change which have also become the prerequisite to attain the long-run productivity growth (Solow, 1956; Hasan and Tucci, 2010). The evidence provided by the endogenous growth literature and Schumpeterian’s (1934) ideology supports such arguments theoretically and empirically as well and confirmed the critical role of technological progress and innovation towards modern growth (Romer, 1986; Grossman and Helpman, 1991; Aghion and Howitt, 1992). Indeed the significance of innovation and its interaction with several other areas of documentation is growing rapidly as per recent studies[1]. In Indian case, ample number of studies discussed about the prospects of economic growth (Panagariya, 2004; Rodrik and Subramanian, 2005; Kohli, 2006; Ghate et al., 2013), but these studies did not focus on the total factor productivity (TFP) growth at the macroeconomic level, particulary ignored on the grounds of innovation- and technology-related activities. And some argued that, by and large, India’s growth story is driven by the factor accumulation than that of the TFP growth (Bosworth and Collins, 2008), who examined the sources of economic growth without giving any emphasis to the innovation and TFP nexus.
It is evidenced in the economic history over the time and clearly observed that in aggregate production function, innovation and human skills have become more vibrant and active, which led to greater spurt in production possibility frontier. For instance, this linkage – innovation-growth nexus – in the context of OECD nations was observed by Pradhan et al. (2017); similarly Andergassen et al. (2017) also elaborated the diffusion channels of innovation and emphasized, the role of general purpose of technologies enhancing economic activity and growth in general. However, such studies widely and increasingly are focusing on emerging nations (Yip and Mckern, 2014; Pathak et al., 2016). Some studies such as Grossman and Helpman (1994) argue that despite the key role of technological progress, the accumulation of other types of growth ingredients (such as physical capital) plays a vital role in the process of long-run economic growth. A detailed survey of literature and diverse arguments pertaining to these studies are provided in the literature section; however, studies on linkage between innovation and productivity growth in India...