R&D, Innovation, and Economic Growth: An Empirical Analysis

IMF Working Paper No. WP/04/185

Posted: 28 Jan 2005

See all articles by Hulya Ulku

Hulya Ulku

University of Manchester - Institute for Development Policy and Management (IDPM); World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2004

Abstract

This paper investigates the main postulations of the R&D based growth models that innovation is created in the R&D sectors and it enables sustainable economic growth, provided that there are constant returns to innovation in terms of R&D. The analysis employs various panel data techniques and uses patent and R&D data for 20 OECD and 10 Non-OECD countries for the period 1981-97. The results suggest a positive relationship between per capita GDP and innovation in both OECD and non-OECD countries, while the effect of R&D stock on innovation is significant only in the OECD countries with large markets. Although these results provide support for endogenous growth models, there is no evidence for constant returns to innovation in terms of R&D, implying that innovation does not lead to permanent increases in economic growth. However, these results do not necessarily suggest a rejection of R&D based growth models, given that neither patent nor R&D data capture the full range of innovation and R&D activities.

Keywords: Innovation, R&D, patents, economic growth, total factor productivity

JEL Classification: O30, O31, O33, O47

Suggested Citation

Ulku, Hulya, R&D, Innovation, and Economic Growth: An Empirical Analysis (September 1, 2004). IMF Working Paper No. WP/04/185, Available at SSRN: https://ssrn.com/abstract=655826

Hulya Ulku (Contact Author)

University of Manchester - Institute for Development Policy and Management (IDPM) ( email )

Manchester M13 9GH
United Kingdom

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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