The effect of research and development (R D) expenditures on export: evidence from a panel of selected OECD countries

Abstract

Purpose-R&D activities help countries to gain competitive power and thus achieve economic growth. The purpose of this paper is to analyze the effect of R & D activities on exports for 16 OECD countries using data from the period 2000-2015. Methodology- Pedroni (1999) and Kao (1999) panel cointegration tests were used to test whether there is a long-term relationship between variables. In order to be able to do the cointegration analysis, the stationary of the variables considered should be determined. The unit root examination is conducted using four unit root tests; namely, the Levin, Li and Chu; Im, Pesaran and Shin W-stat; Fisher-ADF and Fisher-PP. Panel FMOLS and DOLS estimators were used to obtain long run coefficients after the cointegration relation was detected. Findings-As a result of Pedroni and Kao cointegration test, it has been found that there is a long term relationship between R & D expenditures and exports. Both Panel FMOLS and Panel DOLS test results show that the sign of R & D expenditures is positively and statistically significant. According to the Panel FMOLS test results, a 1% increase in R & D expenditures leads to a 0.45% increase in exports. Similarly, according to Panel DOLS test results, 1% increase in R & D expenditures increases exports by 0.43%. Conclusion-The results showed that the effect of R & D expenditures on exports is positive. Results obtained in the study are consistent with existing findings in the literature.

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