R&D Expenditure and Economic Growth: New Empirical Evidence

Abstract

This article provides an empirical analysis of the relationship between research and development (R&D) expenditures and economic growth, and determines whether this relationship differs with respect to the degree of development. In this regard, the study utilises data from 52 countries from 1996 to 2010 and employs a dynamic panel data model. The research finds that R&D expenditure has a positive and significant effect on economic growth for all countries in the long run, which is consistent with the relevant literature. For developing countries, the effect is weak in the short run but strong in the long run, as expected. The study adds new empirical evidence to the literature. JEL Classifications: E24, O11, O32, O47

R&D and Economic Performance: Simultaneous Estimates of the Reciprocal Effects for Africa and Other Regions

“…This is attributed to low and inefficient allocation of R&D expenditure in the sampled countries. In a related study, but contrary to the findings of Samimi and Alerasoul [20], Gocer (2013, cited by Gumus and Celikay [12]) finds a positive relationship between R&D expenditure and economic growth in 11 developing Asian countries for the period of 1996 to 2006. Specifically, 1% increase in R&D expenditure increases modern technology goods exports by 6.5%, information-communication technology exports by 0.6% and economic growth by 0.43%.…”

“…Only increase in R&D intensity improves growth. On the contrary, Guellec and he de la Potterie [8], Ulku [9], Falk [10], Pessoa [11] and Gumus and Celikay [12] find a positive association. For instance, Guellec and he de la Potterie [8] analyse the contribution of technical change to total factor productivity of industry growth among 16 OECD countries between 1980 and 1998.…”

“…The basic finding is that increase in R&D per capita generates increase in TFP in the long-run. Similarly, Gumus and Celikay [12] estimated the relationship between R&D and economic growth among 52 developed and developing countries between 1996 and 2010, and employed dynamic panel data model. The study shows that R&D expenditure has positive impact of growth among all the economies sampled in the long run but the effect of developing countries is weak in the short run, only strong in the long run.…”

Exploring the Relationship between Government R & D Expenditures and Economic Growth in a Global Perspective: A PMG Estimation Approach

“…These studies confirm not only a positive but also a significant relationship in the long-run (Korkmaz, 2010;Taban and Şengür, 2013;Goel et al, 2008;Horvath, 2011and Segerstrom, 2000. Gumus and Celikay (2015) analyzed R& D activities" contribution to the GDP growth, comparing developing and developed economies. They found: "R&D expenditure has a positive and significant effect on economic growth for all countries in the long run, excluding developing countries where the effect is weak in the short run but strong in the long run.…”

The Influence of R&D on Economic Development in the West African Sub-Region

“…These researches vary from different panels, time periods, variables and econometric methods. A study was conducted by Gumus and Celikay [17], comparing the economic growth rate between developed and developing countries per GDP expenditure on R&D, their findings were that in the long run the investment on R&D will be significantly and positively influencing the growth of the economy for all the augmented Solow growth model that includes in its specification the ratio of R&D to GDP and also human capital [21].…”