Abstract
This paper analyzes the effect of research and development (R&D) expenditures on economic growth in the Organization of Economic Cooperation and Development (OECD) countries over the period 2000-2016. This study conducts an empirical analysis using a multiple regression model. The main findings confirm that an increase in research and development expenditure by 1% would generate an increase of real GDP growth rate to 2.83 %. The implication emerging from this study is that government and institutions need to increase investment in R&D expenditures to fulfill inclusive economic growth perspective.
Highlights
Economic growth models emphasize the importance of technical change and assert that technological development is the main driver of economic growth in the long run
Taking evidence from OECD countries, this paper investigates the effect of research and development (R&D) expenditures on economic growth over the period 2000–2016
After reviewing the relevant literature and empirical studies that link the research and development with economic growth, in this paper we set the research question of whether the research and development expenditure in the period from 2000 to 2016 in the OECD countries had a positive effect on economic inclusive growth
Summary
Economic growth models emphasize the importance of technical change and assert that technological development is the main driver of economic growth in the long run. Romer (1987) marks a new theoretical approach to the analysis of economic growth factors, the so-called endogenous growth by formalizing the idea that knowledge leads to continuous economic growth This feature of technological progress has been studied by Grossman and Helpman (Grossman & Helpman, 1991) and Aghion and Howitt (Aghion & Howitt, 1998). To cope with this issue empirical studies differ greatly from sources of data (countries, periods, time), aggregated level (industries or companies) and measurements of key variables such as stocks. Yazgan and Yalcinkaya (2018) evaluate whether or not the economic performance of OECD-20 and OECD-9 countries have a sustainable structure that endogenize the technological advancements and occurs by the increments in average factor productivity They find that R&D variables in different qualifications of the OECD20 and OECD-9 group have statistically significant effects on the economic growth. The remainder of the paper is as follows: Section 2 describes data and methodology, Section 3 presents empirical results and the last section 4 summarizes conclusion
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