The Impact of Research and Development Expenditure on Economic Growth
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Expenditure on research and development often signifies that a country is committed to making advancements in the fields of science and technology. This study attempts to reveal the relationship between economic growth (as measured by GDP per capita) and gross domestic expenditure on research and development as a percentage of gross domestic product (GERD). Other explanatory variables including the unemployment rate, GINI index, education expenditure as a percentage of GDP, labor productivity (as measured by GDP per hour worked), gross savings, and foreign direct investment inflow are also analyzed and utilized to determine this relationship. A time lag of 3 years between each country’s GERD (measured in 2012) and corresponding GDP per capita (measured in 2015) is used to allow time for the expenditure to be transformed into new developments that can impact GDP per capita. A positive correlation between GERD and GDP per capita is hypothesized and supported by the linear regression models developed in this study.