Academic journal article Journal of Emerging Trends in Economics and Management Sciences

The Impact of Research and Development on Socio-Economic Development: Perspectives from Selected Developing Economies

Academic journal article Journal of Emerging Trends in Economics and Management Sciences

The Impact of Research and Development on Socio-Economic Development: Perspectives from Selected Developing Economies

Article excerpt

Abstract

Research and innovation have been acknowledged as critical factors for fuelling long-term sustainable economic growth and, concomitantly, employment creation and poverty alleviation in developed and developing economies. However, the overwhelming majority of studies conducted on these critical factors have tended to focus on developed economies. The purpose of this study, therefore, was to undertake an empirical investigation of the importance of research and innovation for industrial and economic growth in the developing economies of Sub-Saharan Africa (SSA). Specifically, the study investigated the practical utilisation of the end-product of research to fuel innovation and growth in developing economies. The significance of this study therefore derives from utilising empirical findings to influence policy on R&D in sub-Saharan developing countries. The study used the Cobb-Douglas production function and panel data from a selected number of countries in SSA to assess the impact and correlation between research and innovation and economic growth. From our regression results, the estimated parameters of all the independent variables, with the exception of labour, are statistically significant at the 5 percent (or better) level of significance. The coefficients (elasticities) of lagged GDP, gross fixed capital formation (investment) and R&D are all positive and statistically significant. The size of the coefficients implies that a 1% increase in investment, increases economic growth by about 0.236%. Similarly our results show that a 1% increase in gross domestic expenditure on R&D will lead to an increase of about 0.326% in economic growth. The insignificance of the labour variable may be attributed to how the variable was measured in this study. Our inability to obtain comparable measure of the quality of labour across all countries in the study meant that the only measure of labour we could use was the total number of economically active population (aged between 15-65 years). Given the paucity of studies on R&D impact that are devoted exclusively to sub-Saharan Africa, our study supports the general contention among development scholars that technological innovation and their adoption (through increased investment in R&D) remains the pathway to increased growth among emerging economies of the sub-Saharan African region. The study therefore adds to the debate among researchers on the impact of R&D in sub-Sahara African countries, therefore enriching the literature on the subject. In addition governments in these countries should increase support for R&D in the relevant institutions and industries.

Keywords: development, developing countries, research, innovation, socio-economic growth, sub-saharan africa.

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

The importance of research and innovation (technological, product, process, organisational and marketing innovations) in achieving economic growth in developed countries has been firmly established by theoretical and empirical studies. The pioneering studies on this subject include Adam Smith (1776), Schumpeter (1934), and Solow (1957). Later studies firmly establishing a critical link between innovation and growth include Pelz and Andrews (1966); Allen (1970), Rothwell and Robertson (1973), Mansfield (1977), Ebadi and Utterback (1984), Fischer (1980) and Jaffe (1986). Sratmann (2005), one of the latest contributors in this area, has clearly demonstrated that there is a direct positive correlation between R&D investment and economic growth. To date, however, the link between research and innovation and economic growth has been left largely unexplored in the case of developing countries. The purpose of this study is to attempt to supply this necessary link by examining the effect of research and innovation on economic growth in sub- Saharan Africa (SSA).

As noted by Gaillard (2008) research and innovation comprises all fields of Science and Technology (i. …

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