Quadrilateral Relationship Between Information and Communications Technology, Patent Applications, Research and Development Expenditures, and Growth Factors: Evidence from the Group of Seven (G-7) Countries

Abstract

The quadrilateral relationship between information and communications technology (ICT), patent applications, research and development expenditures and specific growth factors examine to formulate the broad-based growth policies in the context of Group of seven (G-7) countries, over the period of 1995–2013. The ICT variables are explained by internet users, mobile cellular subscriptions and high-technology exports; while research and development (R&D) variables include R&D expenditures and researchers in R&D. Patent data is used to evaluate the amount of innovation undertaken in the G-7 countries and it comprises residential patent applicants and non-residential patent applicants. Finally, the study used three growth factors including GDP per capita, foreign direct investment (FDI) inflows and GDP per unit use of energy for appraising the growth reforms in the G-7 countries. The results show that there is a significant and positive relationship between high-technology exports and growth factors, while there is a negative relationship between residential patent applicants and per capita GDP (and FDI inflows). Non-residential patent applicants’ increases GDP per capita while it decreases energy efficiency. Residential patent applicants’ significantly increases energy efficiency in the region. There is a negative relationship between R&D expenditures and GDP per capita (and energy efficiency), while researchers involved in R&D activities significantly enlarge the per capita GDP and energy efficiency in the G-7 countries. The results of variance decomposition analysis confirmed the importance of ICT over the next 10 years period. The study concludes that R&D expenditures and innovation required strong policy vista in order to amplify the growth factors in the region.