The effect of R&D investments on growth and employment in developed country economies

The distinctive development levels of countries is a very old issue in the history of economics. Asymmetric knowledge level lies based on the rise of this problem. The countries with higher knowledge provide a great advantage against other countries. The country that provides knowledge develops new products by utilizing this knowledge. These products create new markets and enable the country to be superior to other countries in foreign trade. While this process, which started with knowledge, proceeds with the product development process, many new methods are developed. How competitors develop innovations and reach their knowledge can only be accomplished through research and development. Carrying out R&D activities will not only increase the competitiveness of a country, yet also ensure its economic growth. The first aim of this study is to test its applicability on countries as an economic policy by suggesting that there is a relationship between R&D expenditures and economic indicators in the context of endogenous growth theories. Another motivation behind this study is to examine the impact of R&D expenditures on economic indicators by country, together with the level of development. Thus, this study was examined with empirical research in the light of the theories in the literature. For the empirical study, the economies of developed countries, which are the countries that carry out intensive R&D activities, have been selected. There are two groups with different levels of development among the developed countries. These are highly developed countries and developed countries. While G7 countries are used in the research as highly developed countries, the other G20 countries were selected for developed countries. Panel Time Series analysis method was used for data analysis. In the first three sections of the study, the conceptual framework related to the subject was examined. In the last part, the empirical application is given. Growth and employment data are used as economic data in the empirical study. As a result of the implementation, it has been determined that there is a long-term effect between R&D expenditures and growth in highly developed countries, but not in developed countries. It is concluded that there is a long-term relationship between R&D expenditures and employment in highly developed countries and this result is also valid for developed countries.