Asymmetric Association among Technological Spillover, Absorptive Capacity and Economic Development: A NARDL Approach

Abstract

The spillover of external research and development (R&D) capital stock and the level of domestic human capital, as a source of absorptive capacity, plays a vital role in stimulating economic growth and development. The objective of this study is to examine the asymmetric associations among human capital, R&D stock spillover, capital import intensity, and output growth in Pakistan over the period 1982 to 2020. For this purpose, we develop and estimate a nonlinear autoregressive distributed lag (NAR DL) model. The results of the bounds test confirm the presence of a long run relationship, while the error correction model confirms the convergence from short run to long run equilibrium among the variables. The impact of machinery and technological good imports is positive on per capita GDP in the long run. In contrast, the impact of external R&D capital stock is symmetric in the short but becomes negative in the long run. The relationship between human capital and per capita GDP appears to be asymmetric because of low spending in the education sector. Based on these findings, we suggest that Pakistan should enhance its share of imports of high tech products and improve its absorptive capacity for the effective use of external R&D resources.