Does Innovation Drive Up Income Inequality in Africa?

This study empirically analyzes, for the first time in Africa, the impact of innovation on income inequality over the period of 2000–2021. Three main results emerge: first, innovation is positively and significantly associated with income inequality at a threshold of 1%. Second, access to electricity, trade openness, CO2 emissions, and natural resource rents significantly reduce income inequality, while the opposite effect is observed for government consumption expenditure. Third, the results reveal a non-linear, inverted U-shaped relationship between innovation and income inequality. This suggests that there is a threshold above which innovation becomes a factor in reducing income inequality in Africa. In any case, it is incumbent upon African countries to consider innovation not only as a critical factor in the economic development of nations, but also as a potential vector for widening the income gap between individuals. A key recommendation would be to develop policies for the appropriation and absorption of innovation on the continent.