Evaluating the Role of Research and Development and Technology Investments on Economic Development of E7 Countries

Evaluating the Role of Research and Development and Technology Investments on Economic Development of E7 Countries

Hasan Dinçer (Istanbul Medipol University, Turkey), Serhat Yüksel (İstanbul Medipol University, Turkey), Zafer Adalı (Artvin Çoruh University, Turkey) and Rıdvan Aydın (Istanbul Medipol University, Turkey)
DOI: 10.4018/978-1-5225-7074-5.ch013

Abstract

This chapter aims to evaluate the effects of research and development on economic growth, export, and unemployment rate in emerging economies. Within this scope, E7 countries are taken into the consideration. Additionally, annual data of these variables for the periods between 1996 and 2016 is tested by using Dumitrescu Hurlin panel causality analysis. It is concluded that research and development expenditure has a positive effect to increase the export amount for these emerging economies. On the other hand, it is also identified that there is not a causality relationship between research and development with economic growth and unemployment rate. Therefore, it is recommended that emerging economies should take necessary actions to increase research and development investment to have higher amount of export. Hence, it can be possible for these countries to minimize the negative effects of current account deficit. In addition to this issue, it can also be seen that making research and development investment plays a key role to improve the economic performance of these countries.
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Literature Review Of Research And Development

Research and development and information and technology investment are so popular subjects in the literature that it attracted the attention of many different researchers. Owing to that condition, there are lots of studies that focus on the relationship between these investments and macroeconomic factors. Some selected studies regarding research and development are given on Table 1.

Key Terms in this Chapter

Developing Country: It means the country which has not reached the developed status yet. Nevertheless, it is believed that this has a potential to grow.

Dumitrescu Hurlin Panel Causality Analysis: It is a type of causality analysis in which panel data is analyzed. It is an advanced form of Granger causality analysis.

E7 Countries: It refers to the seven countries which have the highest economic performance in the class of emerging economies. These are Brazil, China, India, Indonesia, Mexico, Russia, and Turkey.

Stationary Analysis: It aims to identify whether there is a unit root in the series or not.

Export: It is the process of selling domestic good to the foreign countries.

Economic Growth: It is calculated the difference between gross domestic product amount of the country in different periods. It is accepted as the most important indicator of the economic performance of the countries.

Unemployment Rate: It is calculated as the ratio of unemployed people to the labor force. The important point in this situation is that people who are searching job are only included in the labor force.

Current Account Deficit: It is the condition in which foreign currency which comes to the country is lower than the foreign currency that is paid to the foreign countries. It is accepted as one of the most indicator of financial crisis.

Developed Country: It refers to the country which has high economic performance in comparison with the developing and least developed countries.

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