INVESTMENT IN HIGHER EDUCATION AND INNOVATION IN BRAZIL: AN ARDL TIME-SERIES ANALYSIS (2001–2019)

This study investigates the relationship between investment in higher education and innovation, measured by the proxy variable of patent applications, in Brazil from 2001 to 2019. The analysis applies Autoregressive Distributed Lag (ARDL) models to capture both short- and medium-term dynamics. The main objective is to examine whether public expenditure on higher education, in the current year and with a one-year lag, influences the innovation process, measured by the proxy variable of patent generation. The models also include other explanatory variables, such as Research & Development (R&D) expenditure outside universities, Scientific and Technical Activities (STA), and the implementation of the 2004 Innovation Law. The results indicate that the Innovation Law had a positive and statistically significant association with patent activity, suggesting that policy continuity and institutional support play an important role in promoting innovation. Current investment in higher education showed a positive short-term effect in one of the models, while lagged educational spending remained statistically weak, reinforcing the idea of delayed educational impacts. Conversely, R&D expenditure outside universities displayed a negative and significant coefficient, which may reflect inefficiencies or limited absorptive capacity in non-academic sectors. As the analysis is based on secondary data and exploratory models, the results should be interpreted as indicative rather than causal. Overall, the findings suggest that legislative and institutional frameworks contribute more immediately to innovation outcomes than isolated financial inputs. Strengthening coordination between education, research, and innovation policies appears essential for transforming public investment into sustained technological progress