The impact of research and development expenditure on economic growth: An empirical analysis for OECD countries

Today, research and development (R&D) expenditures have gained more importance for both public and private sectors. In recent years, some studies have suggested that technological developments that have emerged as a result of R&D studies have increased economic performance and welfare level. This study investigates the effect of R&D expenditures on per capita income by using data from 37 OECD countries for the years 2001-2019. This study differs from the previous ones by using not only the share of R&D expenditures in gross domestic expenditures but also the number of researchers and patent applications per million people as the main independent variables, by utilizing gross fixed capital investment rate and the ratio of information and communication technologies export in the total exports as control variables, and by the usage of up-to-date data set. Another aspect of the study making it different from the previous ones is that in addition to examining all OECD countries, they are separated by their development levels and the sub-samples are analyzed separately. The result of the analysis shows that R&D expenditures positively affect economic performance. In addition, the analysis made for 37 OECD countries concludes that a 1% increase in research and development expenditures increases per capita income by 0.94%, and this value is 0.84% and 0.30% for developed and developing countries, respectively, when the analysis made by separating them. The quantitative variation in the coefficient estimates of different country groups supports examining countries by separating them.