Research and Development and High Technology Exports in Selected Countries at Different Development Stages: a Panel Co-integration and Causality Analysis

Abstract

This study, aiming to investigate the impact of research and development (Ramp;D) expenditures and the number of researchers involved on the exports of high and medium-high technology manufacturing industries using panel data analysis for countries with different levels of economic development for the period of 1996-2012, comprises three parts. In the first part, the theoretical and empirical literature on Ramp;D and exports is presented. In the second part, the impact of Ramp;D on exports is analyzed. Finally, empirical findings are interpreted. In two different models designed for empirical analysis, high and medium-high technology exports (HTEX) are selected as a dependent variable, and Ramp;D expenditures and the number of researchers (RP) are taken as a measure of technological capability. Panel co-integration parameter estimations show that Ramp;D expenditure elasticity of high-tech exports in developing countries is higher than that of developed ones. According to the results of the panel Vector Error Correction Model (VECM), while there is no short-run causality from Ramp;D and RP to HTEX, there is short-run causality from gross fixed capital formation (GFC) and foreign direct investment (FDI) to HTEX. In the light of these empirical findings which present some important policy implications for developing countries that experience a technological gap compared to developed nations, in order to realize high value-added and sustainable export performance, policies transforming the structure of production and exports from the low-tech towards the high-tech by way of supporting Ramp;D activities and scientific and technological infrastructure are strongly recommended.