A Heterogeneous Panel Causality Test: Research and Development Expenditures and Economic Growth in OECD Countries

Abstract

The rapid spread of technology since the 1990s brought with it various advantages such as high efficiency and low cost in terms of production processes. These advantages have led countries to pay more attention to different variables for this processes. Research and development activities are also among these variables. Theoretically, research development is given an important place in endogenous growth models. Many studies have been made by economists that technological innovation is an endogenous variable and technological innovations with research investments are an important source of economic growth. This study examines the interaction between this variables by heterogeneous panel causality test. According to the empirical findings of the study, the existence of a heterogeneous causal relationship between these two variables is implied for all countries. In this context, today’s system where economic and technological ties are increasing, it can be said that R&D is an important dynamic in terms of economic growth from the point of view of working country sample.