The Effects of Research and Development (R&D) Investments on Sustainable Economic Growth: Evidence from OECD Countries (1996-2015)

This study is devoted to the empirical analysis by second generation panel data analysis of the effects of the R&D investment variables in different qualifications in OECD countries grouped as OECD-20 and OECD-9 based on the income levels of the economic growth for the period of 1996-2015. Within this context, the purpose of this study is to evaluate whether or not the economic growth performances of OECD-20 and OECD-9 countries have a sustainable structure that endogenizes the technological advancements and occurs by the increments in average factor productivity. At the end of the paper it is determined that all the R&D variables in different qualifications of the OECD-20 group have a higher income level in sample period and have positive and statistically significant effects on the economic growth. On the other hand, only the private sector, universities and the total R&D investments have positive and statistically significant effects on the economic growth of the OECD-9 group which has comparatively lower income level. However, it is specified that the size of the positive and statistically significant effects of the R&D investment variables in different qualifications is more than two times bigger in the OECD-20 group as opposed to the OECD-9 group. These results reveal that the economic performances of OECD-20 countries in the investigated period have a more substantial relation with the qualified and sustainable structure that endogenizes the technologic advancements and occurs by the increments in average factor productivity. All of this shows that the R&D investments also are substantially sufficient to change the long-term economic growth performances and income levels of the countries in OECD-20 and OECD-9 groups.