Purpose: In this network age, among the other factors which increase economic growth, the R&D activities, a pivotal and effective factor, carried out by a country. The present study attempts to investigate the empirical R&D expenditure-economic growth nexus in developing and developed economies, and also provides useful insight about how R&D investment works to enhance the economic growth of a country.
Design/Methodology/Approach: In this regard, 21 years data of top 100 economies of the world from 1995 to 2015 has been utilized. The Panel ARD Model approach has been preferred to explore the impact of R&D investment on economic growth (GDP). For construction of the estimation model, five different variables are used. In order to accomplish the results, along with analysing the data of 100 countries a whole, analysis has also been made by dividing countries into different categories and groups. Overall, the Panel ARDL test has been performed on nine different groups of countries.
Findings: The results reveal that, ceteris paribus, there is a strong positive association between R&D expenditure and economic growth (GDP) in the long-run; 1% increase in GERD leads to 0.07% increase in GDP. However, the impact in the developing countries (0.043%) is lower compared to the developed OECD countries (0.27%). No impact of the R&D expenditure on economic growth is observed in the short-run.
Implications/Originality/Value: The study presents some thought-provoking ideas, policy recommendations and implications for the policy makers, planners and researchers, especially in the context of developing economies.
The impact of China's R&D subsidies on R&D investment, technological upgrading and economic growth