Research and development expenditures, number of patent application and economic growth: An application on OECD countries

This study aims to investigate the effect of R & D expenditures and number of patent application on economic growth and the effect of R & D expenditures on patent applications using panel data analysis and 1995 - 2013 annual data for selected 23 OECD (Economic Cooperation and Development Organization) countries. Three models have been established for this purpose and these models have been investigated with a four - stage econometric methods. In the first stage, Friedman, Frees and Pesaran tests were applied to investigate cross-sectional dependency between variables. All of three tests show that there is cross-sectional dependency among the variables for the three models established. In the second stage, stationarity analysis were performed by using Im Pesaran and Shin and Pesaran tests for variables. Im Pesaran Shin and Pesaran with constant term unit root tests show that series have unit root in the level and they are stationary at the 1% significance level when the first difference is taken. In the third stage, the existence of long-term relationship between variables was investigated by Westerlund Panel Cointegration Tests. The cointegration test shows that there is a long-run relationship between variables. In the fourth stage, long and short term coefficients between panel-based variables were estimated by Mean Group Estimator (MGE) and Pooled Mean Group Estimator (PMGE). As a result of econometric analysis, the long - run effect of R & D expenditures and the number of patent application on economic growth and the long run effect of R&D expenditures on number of patent application is positive and statistically significant when evaluated panelwide. On the other hand, the short-run coefficients are positive but not statistically significant for these three models.