The effect of research and development spending on economic growth in OECD countries

Abstract

This paper investigates the effect of total research and development (R&D) spending and its sub-components (business and government R&D spending) on economic growth in 18 OECD countries over the period 1981-2012. The results of the empirical analysis indicate that total and business R&D spending do not have a statistically significant effect on economic growth. However, government R&D spending influences economic growth in both the short and long run. While R&D spending by government has a negative effect on economic growth in the short run this effect becomes positive in the long run. According to these results, it is suggested that instead of total and business R&D spending government R&D spending is efficient in terms of economic growth.