RESEARCH-AND-DEVELOPMENT EXPENDITURES AND ECONOMIC-GROWTH - A CROSS-COUNTRY STUDY

Recognizing the possibility that technical change may be of critical importance in economic growth, this work makes a beginning toward an assessment of the effect of R&D (research and development) outlays on economic growth in an international setting. The effect of R&D outlays on growth appears positive and numerically large, but the statistical significance of the estimates is low. A comparison of the full-sample estimates with those from the LDC subsample indicates that while the labor parameter is weaker in the LDC subsample, as is commonly observed, the effect of both conventional capital and R&D outlays on growth appears stronger in the LDC group, and the difference is particularly large with respect to the R&D coefficient. A reasonable test indicates the absence of any major specification error in the model used, and preliminary estimates based on a somewhat different model of the kind used in several recent growth studies also indicate the effect of R&D outlays to be mildly positive. -from Authors