The Effect of Research and Development Spending on Economic Growth in OECD Countries

Öz This paper investigates the effect of total research and development (R&D) spending and its sub-components (business and government R&D spending) on economic growth in 18 OECD countries over the period 1981-2012. The results of the empirical analysis indicate that total and business R&D spending do not have a statistically significant effect on economic growth. However, government R&D spending influences economic growth in both the short and long run. While R&D spending by government has a negative effect on economic growth in the short run this effect becomes positive in the long run. According to these results, it is suggested that instead of total and business R&D spending government R&D spending is efficient in terms of economic growth

Anahtar Kelimeler:

R&D spending, economic growth, Mean Group Estimator

PDF

___

Arellano, Manuel and Stephen Bond. “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations”, The Review of Economic Studies, Volume: 58, No: 2, April 1991, p.277-297.

Arellano, Manuel and Olympia Bover. “Another Look at the Instrumental Variable Estimation of Error-Components Model”, Journal of Econometrics, Volume: 68, Issue: 1, July 1995, p.29-51.

Barro, Robert J. and Jong-Wha Lee. “International Comparisons of Educational At- tainment”, Journal of Monetary Economics, Volume: 32, Issue: 3, December 1993, p.363-394.

Bassanini, Andrea and Stefano Scarpetta. “Does Human Capital Matter for Growth in OECD Countries? A Pooled Mean Group Approach”, Economics Letters, Volume: 74, Issue: 3, February 2002, p.399-405.

Blackburne, Edward F. and Mark W. Frank. “Estimation of Nonstationary Heter- ogenous Panels”, The Stata Journal, Volume: 7, No: 2, 2007, http://www.stata- journal.com/sjpdf.html?articlenum=st0125, p.197-208, (accessed 01.10.2015).

Choi, In. “Unit Root Tests for Panel Data”, Journal of International Money and Finance, Volume: 20, Issue: 2, April 2001, p.249-272.

Coe, David T. and Elhanan Helpman. “International R&D Spillovers”, European Economic Review, Volume: 39, Issue: 5, May 1995, p.859-887.

Demetriades, Panicos and Siong Hook Law. “Finance, Institutions and Economic Growth”, International Journal of Finance & Economics, Volume: 11, Issue: 3, July 2006, p.245-260.

Engelbrecht, Hans-Jürgen. “International R&D Spillovers, Human Capital and Productivity in OECD Economies: An Empirical Investigation”, European Economic Review, Volume: 41, Issue: 8, August 1997, p.1479-1488.

Falk, Martin. “R&D Spending in the High-tech Sector and Economic Growth”, Re- sarch in Economics, Volume: 61, Issue: 3, September 2007, p.140-147.

Frantzen, Dirk. “R&D, Human Capital and International Technology Spillovers: A Cross-Country Analysis”, The Scandiavian Journal of Economics, Volume: 102, Issue: 1, March 2000, p.57-75.

Fraumeni Barbara M. and Sumiye Okubo. “R&D in the National Income and Product Accounts A First Look at its Effect on GDP”, in Carol Corrado, John Haltiwanger and Dan Sichel (Editors) Measuring Capital in the New Econo- my, University of Chicago Press, August 2005, http://www.nber.org/chapters/ c10624.pdf, p.275-321, (accessed 01.12.2015).

Goel, Rajeev K., James E. Payne and Rati Ram. “R&D Expenditures and U.S. Eco- nomic Growth: A Disaggregated Approach”, Journal of Policy Modelling, Vol- ume: 30, Issue: 2, March-April 2008, p.237-250.

Guellec, Dominique and Bruno Van Pottelsberghe de la Potterie. “R&D and Pro- ductivity Growth: Panel Data Analysis of 16 OECD Countries”, OECD Eco- nomic Studies, No: 33, 200I/II, http://www.oecd.org/eco/growth/1958639.pdf, p.103-126, (accessed 01.11.2015).

Guellec, Dominique and Bruno Van Pottelsberghe de la Potterie. “From R&D to Productivity Growth: Do Institutional Settings and the Source of Funds of R&D Matter?”, Oxford Bulletin of Economics and Statistics, Volume: 66, Issue: 3, July 2004, p.353-378.

Guloglu, Bulent and R. Barıs Tekin. “A Panel Causality Analysis of the Relation- ship among Research and Development, Innovation, and Economic Growth in High-Income OECD Countries”, Eurasian Economic Review, Volume: 2, Issue: 1, June 2012, p.32-47.

Hall, Bronwyn H., J. Mairesse and Pierre Mohnen. “Measuring the Returns to R&D”, NBER Working Paper, No: 15622, December 2009, http://www.nber. org/papers/w15622 (accessed 01.11.2015).

Hausman, J. A. “Specification Tests in Econometrics”, Econometrica, Volume: 46, No: 6 , November 1978, p.1251-1271.

Im, Kyung So, M. Hashem Pesaran and Yongcheol Shin. “Testing for Unit Roots in Heterogenous Panels”, Journal of Econometrics, Volume: 115, Issue: 1, July 2003, p.53-74.

Kokko, Ari, Patrik Gustavsson Tingvall and Josefin Videnord. “The Growth Ef- fects of R&D Spending in the EU: A Meta Analysis”, Economics The Open- Access, Open Assessment E-Journal, Discussion Paper No: 2015-29, http:// www.economics-ejournal.org/economics/discussionpapers/2015-29, (accessed 01.10.2015).

Lichtenberg, Frank R. “R&D Investment and International Productivity Differenc- es”, NBER Working Papers, No: 4161, September 1992, http://www.nber.org/ papers/w4161 (accessed 15.11.2015).

Loayza, Norman V. and Romain Rancière. “Financial Development, Financial Fra- gility, and Growth”, Journal of Money, Credit and Banking, Volume: 38, No: 4, June 2006, p.1051-1076.

Mankiw, N. Gregory, David Romer and David N. Weil. “A Contribution to the Empirics of Economic Growth”, Quarterly Journal of Economics, Volume: 107, Issue: 2, May 1992, p.407-437.

Organization for Economic Co-operation and Development (OECD). OECD Sci- ence, Technology and R&D Statistics Database, 2015.

Pesaran, M. Hashem, and Ron Smith. “Estimating Long-run Relationships from Dynamic Heterogenous Panels”, Journal of Econometrics, Volume: 68, Issue: 1, July 1995, p.79-113.

Pesaran, M. Hashem, Yongcheol Shin and Ron P. Smith. “Pooled Mean Group Esti- mation of Dynamic Heterogenous Panels”, Journal of the American Statistical Assocation, Volume: 94, Issue: 446, June 1999, p.621-634.

Pesaran, M. Hashem, Yongcheol Shin and Richard J. Smith, “Bounds Testing Ap- proaches to the Analysis of Level Relationships”, Journal of Applied Econo- metrics Special Issue: In Memory of John Denis Sargan 1924-1996: Studies in Empirical Macroeconometrics, Volume: 16, Issue: 3, May/June 2001, p.289-326.

Pessoa, Argentino. “R&D and Economic Growth. How Strong is the Link?”, Eco- nomics Letters, Volume: 107, Issue: 2, May 2010, p.152-154.

Romer, Paul M. “Endogenous Technological Change”, Journal of Political Econ- omy, Part 2: The Problem of Development: A Conference of the Institute for the Study of Free Enterprise Systems, Volume: 98, No: 5, October 1990, p.S71- S102.

Silaghi, Monica Ioana Pop, Diana Alexa, Cristina Jude, Cristian Litan. “Do Busi- ness and Public Sector Research and Development Expenditures Contribute to Economic Growth in Central and Eastern European Countries? A Dynamic Panel Estimation”, Economic Modelling, Volume: 36, January 2014, p.108-119.

Solow, Robert M. “Technical Change and the Aggregate Production Function”, The Review of Economics and Statistics, Volume: 39, No: 3, August 1957, p.312-320.

Ulku, Hulya. “R&D, Innovation, and Economic Growth: An Empirical Analysis”, IMF Working Papers, Working Paper No: 04/185, September 2004, https:// www.imf.org/external/pubs/ft/wp/2004/wp04185.pdf, (accessed 15.09.2015).

World Bank. World Development Indicators Database, http://data.worldbank.org/ data-catalog/world-development-indicators, (accessed 01.09.2015).