The Journal of Economic Studies and Policies

The Journal of Economic Studies and Policies

The Effects of research & development expenditures on economic growth using PMG and MG (A Case Study of Iran and the Selected Business Partners)

Document Type : Original Article

Authors
1 PhD student in Economics Department, Faculty of Economics and Management, Qom University, Qom, Iran.
2 Assistant Professor, Department of Electrical Engineering, Arak University of Technology, Arak, Iran.
Abstract
Today, one of the important issues in macroeconomic planning of countries is investing in research and development (R&D). Considering that the cost of this type of investment is significant, It is important for policymakers to assess the effects of R&D spending on economic growth and its real return. Therefore, this study analyzes the effect of R&D expenditures on economic growth for Iran and its selected business partners during the years (2001-2018) using the pooled mean group (PMG) method. The results show that in the long run, R&D expenditures Growth with a coefficient of 0.46 has a positive and significant effect on economic growth of countries. Also, the variables of physical capital stock growth and employed labor force growth have been used in the model and the results indicate that there is a long-term causal relationship between these variables and economic growth. short-term results for Iran indicate that the variables of R&D expenditures growth, physical capital stock growth and employed labor force growth have significant effects on Iran's economic growth in the period under review; Therefore, In order to achieve continuous and sustainable economic growth, it is necessary to increase the credits of the R&D sector in all economic sub-sectors while increasing the quality and quantity of factors of production.
Keywords

Bibliography
Aghion, Philippe, and Peter Howitt. Endogenous Growth Theory. Cambridge, MA: MIT Press, 1998.
Akcali Burcay, Yasar, and Elcinand Sismanoglu. “Innovation and the Effect of Research and Development (R&D) Expenditure on Growth in Some Developing and Developed Countries”, Journal of Procedia - Social and Behavioral Sciences 195, No. 3 (2015): 768-775.
Anousheh, Shahrzad. “The Effect of R & D Expenditure on Economic Growth to Separate Sections of the Investor (Case Study of OIC Countries).” Quarterly Journal of Applied economics 2, no. 7(2011): 59-78. [In Persian]
Ashrafzadeh, Hamidreza, and Nader Mehregan. Advanced Panel Data Econometrics. Hamedan: Noure Elm, 2014. [In Persian]
Ashrafzadeh, Hamidreza, and Nader Mehregan. Panel Data Econometrics. Tehran: Tehran University Publications, 2008. [In Persian]
Bernard, Fingleton. “Equilibrium and Economic Growth: Spatial Econometric Models and Simulations.” Journal of Regional Science 41, No. 1 (2001): 117-147.
Besharat, Ali, Reza Ranjpour, and Seyyed Kamal, Sadeghi. “The Study of the Most Effective Factors Explaining Economic Growth in OIC Countries: Bayesian Panel Likelihood Ppproach.” Quarterly Journal of Applied Theories of Economics5, no. 3 (2018): 239-263. [In Persian]
Coe, David T. and Elhanan Helpman. “International Research and Development Spillovers.” European Economic Review 5, No. 39 (May 1995): 859–887.
Daghighi Asli, Alireza, Pajooyan Jamshid, and Sara Sadat Haj Mousavi. “The Effect of R&D Expenditure in Higher Education Sector on Economic Growth in Europe Union Countries.” Journal of Financial Economics7, no. 24(January 2014): 73-100. [In Persian]
Freeman, Chris. The Economics of Industrial Innovation. England: Harmondsworth Penguin Books, 1974.
Freimane, Rita, and Signe Balina. “Research and Development Expenditures and Economic Growth in the EU: A Panel Data Analysis. Economics and Business.” Economics and Business29, No.1 (2016): 5–11.
Gabsi, Sahbi, and Ali Chkir. “Research and Development (R&D) Spillovers and Economic Growth: Empirical Validation in the Case of Developing Countries.” Journal of Economics and International Finance 4, No. 5 (2012): 107–122.
Grossman, Gene. M., and Elhanan Helpman. “Innovation and Growth in the Global Economy.” Cambridge, MA: MIT Press, 1991.
Heidari, Hasan, and Bahram Sanginabadi. “The Effect of R&D on Economic Growth in Iran.” Journal of Economic Research (Tahghighat- E- Eghtesadi) 48, no. 2 (2013): 1-23. [In Persian]
Jamali, Paghalue, Morteza, and Ehsan Shafiezadeh. “Comparative Analytic Approach to Research & Development in Iran and Some Developed Countries.” Journal of Roshde Fannavari 31, no. 8 (2012):23-34. [In Persian]
Jones, Charles I. “R&D-Based Models of Economic Growth.” Journal of Political Economy 103, no. 4 (Augest 1995): 759-784.
Kokko, Ari, Patrik Gustavsson Tingvall, and Josefin Videnord. “The growth effects of R&D spending in the EU: A meta analysis.”Economics, Open-Assessment E-Journal 9, No. 40 (2015): 1-26. 
Lucas, Robert Jr. “On the Mechanics of Economic Development.” Journal of Monetary Economics22, No. 1 (1988): 3-42
Macys, Gediminas. “The Innovation and Economic Growth: The Situation in Baltic States, European Int.” Journal of Science and Technology2, No. 3 (2013): 197-209.
Mastromarco, Camilla, and Sucharita Ghosh. “Foreign Capital, Human Capital and Efficiency: A Stochastic Frontier Analysis for Developing Countries.” World Development, Elsevier 37, no. 2 (February 2009): 489-502.
Mehregan, Nader, and Leili Soltani Sehat. “R&D costs and total factor productivity of industrial sector.” Quarterly Journal of The Macro and Strategic Policies2, no. 5(2014): 1-14. [In Persian]
Mohammadi, Teimour, and Mohammadreza. Salmani. “Testing The Endogeneous Growth Model for Iran Economy (Based On VAR).” Economics Research 4, no.15(2004): 169-198. [In Persian]
Mohammadzadeh Asl, Nazi, Roya, Seifi Pour, and Azade. Mehrabian. “The Impact of the Return of Research and Development on Economic Growth (Using Regression Quintiles Model).” Journal of Economics and Business Research 8, no. 15 (2017): 1-14. [In Persian]
Naghdi, Yazdan, Soheila. Kaghazian, Niki. Mohsni fakhr and Hadi. Parhizi Gashti. “Effects of Nano-Technology on Economic Growth in Selected Countries.” Economical Modeling7, no. 21 (2015): 85-99. [In Persian]
Nazari, Mohsen and Asghar Mobarak. “The effect of research and development (D & R) investment on productivity in Iranian industries.” Macroeconomics Research Letter7, no 14 (2013): 151-174. [In Persian]
Nikoomaram, Hashem, Fereidoun Rahnamai Roudposhti, Iman Jokar Tang Karami. “Explaining the role of foreign trade and innovation through the acquisition of foreign technology on investment and economic growth of Iran.”  Financial Knowledge of Securities Analysis 6, no. 20 (2013): 91-108. [In Persian]
Pesaran, M. Hashem, Yongcheol Shin, and Ron P. Smith. “Pooled mean group estimation of dyna-mic heterogeneous panels.” Journal of the American Statistical Association94 (1999): 621–634.
Romer, Paul M. “Endogenous Technological Change.” Journal of Political Economy 98, No. 5 (1990): 71-102.
Romer, Paul M. “Increasing Return and Long Run Growth.” Journal of Political Economy, No. 94, (October 1986): 1002-1037
Schultz, Theodore W. “Investment in human capital.” The American Economic Review51, No.1 (1961): 1-17.
Shahabadi, Abolfazl, Hosein Sohrabi Vafa, and Younes Salmani. “Role of R&D Activitis and Physical Stock on Economic Growth: Evidence from Iran, Turkey and Malaysia.” Economic Growth and Development Research 6, no.23 (2016): 88-75. [In Persian]
Tari, Recep and Mustafa Alabas. “The relationship between R&D expenditures and economic growth: the case of Turkey (1990-2014).” Bolu Abant Izzet Baysal Universitesi Sosyal Bilimler Enstitusu Dergisi 17, No. 2 (2017): 1-17.
Tsaurai, Kunofiwa. “Scaling up innovation: does research and development have a role to play in economic growth? A case of Hungary.” International Journal of Education Economics and Developmentm8, No.1 (2017): 65–77.
Zafar, Muhammad Wasif, Muhammad Shahbaz, Fujun Hou, and Avik Sinha. “From nonrenewable to renewable energy and its impact on economic growth: The role of research & development expenditures in Asia-Pacific Economic Cooperation countries.” Journal of Cleaner Production, no 212 (2019): 1166-1178. [In Persian]
Zamanian, Gholamreza, Mohammad Hasan, Fotros, and Elham Rezaei. “Impact of Research and Development Spillovers on the Total Factor Productivity of Iranian Manufacturing Industries.”Economic Growth and Development Research 5, no.17 (2014): 91-108. [In Persian]
Send comment about this article
Enter Name.
Enter a valid email address.
Enter a vaid affiliation.
Enter comments (At leaset 10 words)
CAPTCHA Image
Enter Security Code Correctly.