The impact of research and development expenditures on economic growth and unemployment

Public research and development (R&D) expenditures, which often play a role in leading general investment activities to support production, are one of the most critical and useful tools for economic development policies. Although the channels of influence of R&D spending are diverse and complex, the benefits for human capital development, industrial productivity, and basic research are clear. However, with the rapid growth of the private sector in the Turkish economy, it is debatable whether the government will continue to use the public financial budget to invest in R&D. This study, which was conducted to simulate the impact of public R&D expenditures on the Turkish economy, can serve as a valuable reference not only for decision makers in government institutions, but also for academic researchers. The aim of this study is to analyze what kind of gains the rapidly developing technology in line with R&D expenditures reveals in terms of economic growth and unemployment parameters of our country. In this context, annual data for the years 1990 – 2020 are used. The data used in the analysis were obtained from TURKSTAT. R&D expenditures were chosen as independent variables and economic growth and unemployment were selected as dependent variables. Augmented Dickey Fuller (ADF) unit root test and Toda-Yamamoto causality analysis test were used as econometric methods in this study. According to the results of the Toda-Yamamoto causality test; While no causality relationship was found between R&D expenditures and economic growth, a one-way causality relationship was found between R&D expenditures and unemployment from R&D expenditures to unemployment variable. In particular, the inability to find any relationship between R&D expenditures and economic growth reveals that the share allocated to R&D expenditures in Turkey is approximately 1% of GDP.