The effect of technological developments and high technology exports on the economic growth performance of the countries

The dynamics of economic growth vary across countries, depending on their level of development. Technological progress and investment in human capital are particularly important for increasing the welfare of countries and ensuring a fair distribution of income. In today's competitive market, where R&D expenditures and innovation play a critical role, countries prioritize these aspects to achieve economic growth. Moreover, there is a desire to advance technology to its highest level and harness it as a driving force for economic growth. This thesis study utilizes Panel VAR analysis as an econometric method to examine the impact of technological developments and high technology exports on economic growth for EU member countries between 1995 and 2018. The results of the Panel VAR analysis reveal a positive relationship between R&D expenditures and economic growth, indicating that an increase in R&D investments leads to a corresponding rise in economic output. However, the analysis also highlights the negative impact of high-tech exports on economic growth, suggesting that high-volume high-tech exports may have adverse effects on overall economic expansion. Furthermore, the examination of the relationship between labor force, GCF, and economic growth reveals that the labor force has a positive effect on economic growth. Based on the findings of the Granger causality analysis, the causal relationships between different economic variables are explained. It has been noted that there is a unidirectional relationship between GDP and R&D expenditures, a bidirectional relationship between high technology exports and economic growth, a unidirectional relationship between R&D expenditures and high technology exports, and a bidirectional relationship between GCF and high technology exports. Within the framework of all these results, EU member countries should primarily encourage R&D, support technological progress and give importance to human capital and workforce participation. While providing these, it should aim at a balanced economic growth.