The Effects of Research and Development (R&D) Investments on Sustainable Economic Growth: Evidence from OECD Countries (1996-2015)

Open access

Abstract

This study is devoted to the empirical analysis by second generation panel data analysis of the effects of the R&D investment variables in different qualifications in OECD countries grouped as OECD-20 and OECD-9 based on the income levels of the economic growth for the period of 1996-2015. Within this context, the purpose of this study is to evaluate whether or not the economic growth performances of OECD-20 and OECD-9 countries have a sustainable structure that endogenizes the technological advancements and occurs by the increments in average factor productivity. At the end of the paper it is determined that all the R&D variables in different qualifications of the OECD-20 group have a higher income level in sample period and have positive and statistically significant effects on the economic growth. On the other hand, only the private sector, universities and the total R&D investments have positive and statistically significant effects on the economic growth of the OECD-9 group which has comparatively lower income level. However, it is specified that the size of the positive and statistically significant effects of the R&D investment variables in different qualifications is more than two times bigger in the OECD-20 group as opposed to the OECD-9 group. These results reveal that the economic performances of OECD-20 countries in the investigated period have a more substantial relation with the qualified and sustainable structure that endogenizes the technologic advancements and occurs by the increments in average factor productivity. All of this shows that the R&D investments also are substantially sufficient to change the long-term economic growth performances and income levels of the countries in OECD-20 and OECD-9 groups.

References

  • AGHION, P., HOWITT, P. (1992). A Model of Growth Through Creative Destruction. Econometrica, 60(2), 323 351.

  • AKÇOMAK, I.S. (2014). Technology, Innovation and Economic Growth, in (Prepared by Ahmet Faruk Aysan-Devrim Dumludağ), New Approaches for Development, Imge 1st Edition, 473-493.

  • AKÇOMAK, S., TER WEEL, B. (2009). Social Capital, Innovation and Growth: Evidence from Europe. European Economic Review, 53 (5), 544-567. DOI: 10.1016/j.euroecorev.2008.10.001

  • ALTIN, O., KAYA, A. (2009). Analysis of the Casual Relationship Between R&D Expenditures and Economic Growth for Turkey. Ege Academic Review, 9(1), 251-259.

  • ALTINTAŞ, H., MERCAN, M. (2015). R&D Expenditures and Economic Growth Relation: Panel Cointegration Analysis under the Cross-Section Dependence on OECD Countries. Ankara University, Journal of Social Sciences Faculty, Volume 70, No 2, 345-376.

  • BASSANINI, A., SCARPETTA, S. (2001). The Driving Forces of Economic Growth: Panel Data Evidence for The OECD Countries. OECD Economic Studies, 33(2001/II), 9-56.

  • BERBER, M. (2011). Economic Growth and Development: Growth Theories and Development Economics, Trabzon: Derya Bookstore.

  • BOTAZZI, L., PERI, G. (2003). Innovation and Spillovers in Regions: Evidence from European Patent Data. European Economic Review, 47,687–710. DOI: 10.1016/S0014-2921(02)00307-0

  • BREITUNG, J. (2005). A Parametric Approach to The Estimation of Cointegration Vectors in Panel Data. Econometric Reviews, 24(2), 151-173. DOI: 10.1081/ETC-200067895

  • BREUER, J. B., MCNOWN, R., WALLACE, M. (2002). Series-specific Unit Root Tests with Panel Data. Oxford Bulletin of Economics and Statistics, 64(5), 527-546. DOI: 10.1111/1468-0084.00276

  • DEL MONTE, A., PAPAGNI, E. (2003). R&D and the Growth of Firms: Empirical Analysis of a Panel of Italian Firms. Research Policy, 32 (6), 1003-1014. DOI: S0048-7333(02)00107-5

  • DUMITRESCU, E.I., HURLIN, C. (2012). Testing for Granger Non-Causality in Heterogenous Panels. Economic Modeling, 29(4), 1450–1460. DOI: 10.1016/j.econmod.2012.02.014

  • EBERHARDT, M., BOND, S. (2009). Cross-section Dependence in Nonstationary Panel Models: A Novel Estimator. Munich Personal RePEc Archive, MPRA Paper No: 17692.

  • EID, A. (2012). Higher Education R&D and Productivity Growth: An Empirical Study on High-Income OECD Countries. Education Economics, February, 20(1), 53-68. DOI: 10.1080/09645291003726855

  • FALK, M. (2007). R&D Spending in the High-Tech Sector and Economic Growth. Research in Economics, 61, 140-147. DOI: 10.1016/j.rie.2007.05.002

  • FREIRE-SEREN, M.J. (1999). Aggregate R&D Expenditure and Endogenous Economic Growth. UFAE and IAE Working Papers, No: WP 436.99

  • GROSSMAN, G., HELPMAN, E. (1991). Quality Ladders in the Theory of Economic Growth. Review of Economic Studies, 58, 43-61.

  • GULMEZ, A., YARDIMCIOĞLU, F. (2012). R&D Expenditures and Economic Growth Relations in OECD Countries: Panel Cointegration and Panel Causality Analysis (1990-2010). Journal of Finance, 163, 335-353.

  • GÜLOĞLU, B., TEKIN, R.B. (2012). A Panel Causality Analysis of the Relationship Among Research and Development, Innovation, and Economic Growth In High-Income OECD Countries. Eurasian Economic Review, 2(1), 32-47.

  • GYEKYE, A. B., OSEIFUAH, E. K., QUARSHIE, V. (2012). The Impact of Research and Development on Socio-Economic Development: Perspectives from Selected Developing Economies. Journal of Emerging Trends in Economics and Management Scienc-es, 3 (6), 915-922.

  • HADRI, K., KUROZUMI, E. (2012). A Simple Panel Stationarity Test in the Presence of Serial Correlation and a Common Factor. Economics Letters, 115, 31–34. DOI: 10.1016/j.econlet.2011.11.036

  • IM, K. S., PESARAN, M. H., SHIN, Y. (2003). Testing for Unit Roots in Heterogenous Panels. Journal of Econometrics, 115(1), 53-74. DOI: 10.1016/S0304-4076(03)00092-7

  • JOHANSEN, S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control, 12(2), 231-254. DOI: 10.1016/0165-1889(88)90041-3

  • KAO, C. (1999). Spurious Regression and Residual-Based Tests for Cointegration in Panel Data. Journal of Econometrics, 90(1), 1-44. DOI: 10.1016/S0304-4076(98)00023-2

  • LEVIN, A., LIN, C. F., CHU, C. S. J. (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108 (1), 1-24. DOI: 10.1016/S0304-4076(01)00098-7

  • INEKWE, J. N. (2015). The Contribution of R&D Expenditure to Economic Growth in Developing Economies. Social indicators research,124.3: 727-745.

  • KIBRITÇIOĞLU, A. (1998). Economic Growth Determiners and Human Capital in New Growth Models. AU Journal of Political Sciences, 53(1-4), 207-230.

  • KIM, J.W. (2011). The Economic Growth Effect of R&D Activity in Korea. Korea and the World Economy, 12(1),25-44.

  • KONTRADIEFF, N. D. (1935). The Long Waves in Economic Life. The Review of Economic Statistics, 17(6): 105–115.

  • MCCOSKEY, S., KAO, C. (1998). A Residual-based Test of the Null of Cointegration in Panel Data. Econometric Reviews, 17, 57-84. DOI: 10.1080/07474939808800403

  • MEHRAN, M., REZA, M. (2011). A Comparative Investigation of the Relation of R&D Expenditures to Economic Growth in a Group of the Less Developed Countries and OECD Countries. Journal of Social and Development Sciences, 2 (4), 188-195.

  • ÖZCAN, B., ARI, B. (2014). Research-Development Expenditures and Economic Growth Relation: Panel Data Analysis. Journal of Finance, 166, 39-55.

  • ÖZER, M., ÇIFTÇI, N. (2009). R&D-Based Endogeneous Growth Models and the Effect of R&D Expenditure on Economic Growth’: OECD Countries Panel Data Analysis. SU Faculty of Economics and Administrative Sciences, Journal of Social and Economic Research, 219-239.

  • PARK, W.G. (1995). International R&D Spillovers and OECD Economic Growth. Economic Inquiry, 33(4), 571-591. DOI: 10.1111/j.1465-7295.1995.tb01882.x

  • PESARAN, M. H. (2007). A Simple Panel Unit Root Test in The Presence of Cross-Section Dependence. Journal of Applied Econometrics, 22(2), 265-312. DOI: 10.1002/jae.951

  • PESARAN, M. H., ULLAH, A. AND YAMAGATA, T. (2008). A Bias-Adjusted LM Test of Error Cross-Section Independence. The Econometrics Journal, 11(1), 105-127. DOI: 10.1111/j.1368-423X.2007.00227.x

  • PESARAN, M. H., YAMAGATA, T. (2008). Testing Slope Homogeneity in Large Panels. Journal of Econometrics, 142(1): 50-93. DOI: 10.1016/j.jeconom.2007.05.010

  • PIRAS, G., POSTIGLIONE, P. AND AROCA, P. (2011). Specialization, R&D and Productivity Growth: Evidence from EU Regions. The Annals of Regional Science, 49, 35-51. DOI: 10.1007/s00168-010-0424-2

  • ROMER, P.M. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy, 94(5), 1002-1037. DOI: 10.1086/261420

  • SAMIMI, A. J., ALERASOUL, M. S. (2009). R&D and Economic Growth: New Evidence from Some Developing Countries. Australian Journal of Basic and Applied Sciences, 3 (4), 3464-3469.

  • SARAÇ, B. T. (2009). The Effect of Research&Development Expenditures on Economic Growth: A Panel Data Analysis. Econ Anatolia 2009: Anadolu International Conference in Economics, 17-19 June 2009, Eskişehir, Turkey.

  • SCHUMPETER, J. A. (1939). Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, New York and London: McGraw-Hill.

  • SOLOW, R.M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70(1), 65-94. DOI: 10.2307/1884513

  • SYLWESTER, K. (2001). R&D and Economic Growth. Knowledge, Technology & Policy, 13(4), 71-84.

  • TARI, R. (2010). Econometric, 6th Edition, Umuttepe Publishings, Kocaeli.

  • TATOĞLU, F. Y. (2013). Advanced Panel Data Analysis-Stata Applied, (2nd Edition), İstanbul: Beta.

  • TUREDI, S. (2016). The Relationship between R&D Expenditures, Patent Applications and Growth: A Dynamic Panel Causality Analysis for OECD Countries. Anadolu Üniversitesi Sosyal Bilimler Dergisi, 16 (1), 39-48.

  • TURKCAN, E. (2016). Evolutionary Periods of Science and Technology in History, in (Prepared by İbrahim Semih Akçomak, Erkan Erdil- Mehmet Teoman Pamukçu-Murad Tiryakioğlu), Science, Technology and Innovation Concepts, Theories and Policy, Istanbul Bilgi University Publication 1. Baskı,47-60.

  • TURKONFED. (2013). Exit from Middle Income Trap, Which Turkey? Volume 2: Regional Development and Exit Strategies from the Dual Trap. (Prepared by E. Yeldan, K. Taşçı, E. Voyvoda, M. Emin Özsan), İstanbul: Turkish Enterprise and Business Confederation.

  • WESTERLUND, J. (2008). Panel Cointegration Tests of the Fisher Effect. Journal of Applied Econometrics, 23(2), 193-233. DOI: 10.1002/jae.967

  • WESTERLUND, J., EDGERTON, D. L. (2007). A Panel Bootstrap Cointegration Test. Economics Letters, 97(3), 185-190. DOI: 10.1016/j.econlet.2007.03.003

  • YANYUN, Z., MINGQIAN, Z. (2004). R&D and Economic Growth-Panel Data Analysis in ASEAN+3 Countries. Seoul Conference 2004, Korea and the World Economy III.

  • ZACHARIADIS, M. (2004). R&D-induced Growth in the OECD? Review of Development Economics, 8(3), 423-439. DOI: 10.1111/j.1467-9361.2004.00243.x

Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

Journal Information


CiteScore 2016: 0.50

SCImago Journal Rank (SJR) 2016: 0.262
Source Normalized Impact per Paper (SNIP) 2016: 0.516

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 25 25 25
PDF Downloads 12 12 12