Knowledge creation and economic growth: the importance of basic research

Economic growth continues to be a crucial determinant of the achievement of socioeconomic goals. Therefore, the observed declines in economic growth and productivity levels over the last few decades have been a cause for concern, and this has reignited the discussion on the importance of intangible sources of economic growth and productivity such as intellectual property, research, technology, software and human capital. This study investigates the effect of knowledge creation through basic research (article publications) on economic growth for 130 countries from 1995 to 2020 using the Least Absolute Shrinkage and Selection Operator regression. The results of the study show that knowledge creation is positively associated with economic growth and these results are robust to various sensitivity tests. However, the impact of publications is larger for developed countries which can be explained by the large number of publications relative to emerging and developing countries. Moreover, publications in the Science, Technology, Engineering and Mathematics fields have a larger effect on economic growth. The study recommends increased investments in basic research in order to promote knowledge creation particularly in the Science, Technology, Engineering and Mathematics fields in developing and emerging economies.