WIFO White Paper: Determinants of Economic Growth in the OECD Countries
This paper provides new evidence for the determinants of long-term economic growth in OECD countries. In particular, we investigated the role of specialised R&D activities (i.e., R&D investment in the high-tech sector), human resources, R&D expenditure by business as a percentage of GDP, high-technology exports, industry structure and the lagging growth rate as a measure of catch-up growth. To model the determinants, we use a dynamic panel data model estimated with a system GMM estimator. The data are taken from a panel of OECD countries for the period of 1970-2004, measured as five-year averages. To our knowledge this paper is the first to investigate whether the specialisation of R&D activities (i.e., R&D investment in the high-tech sector) has an additional effect on per-capita GDP. We found that the ratio of business enterprises' R&D expenditures to GDP, human resources measured as average years of education, and the share of high-tech exports are all significantly related to per-capita GDP in the long term. More importantly, we found that the share of R&D investment in the high-tech sector has strong positive effects on per-capita GDP in the long term. The magnitude of the effect indicates the presence of substantial technological spillover effects. Furthermore, we found that the value added by technology-driven industries shows a significantly positive correlation to per-capita GDP. Finally, there is a high degree of persistence in per-capita GDP over time.
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