ICT Diffusion, R&D Intensity, and Economic Growth: a Dynamic Panel Data Approach

Using panel data of 34 Organization for Economic Co-operation and Development (OECD) countries from 1990 to 2012, this article investigates the intricate link among ICT diffusion, R&D intensity, and economic growth by employing Panel VAR techniques. The novelty of this paper is to identify the causality channels among R&D, ICTs, and economic growth. Econometric evidence yields that bi-directional causality takes place between ICTs and economic growth. While ICT diffusion leads to a rise in the share of R&D personnel in total employment, it has no causal impact on the share of income devoted to R&D. In this context, empirical results offer that OECD countries need to support the development of ICTs not only to foster economic growth but also to enhance the R&D sector.