Journal of Advances in Economics and Finance

R&D and Economic Performance: Simultaneous Estimates of the Reciprocal Effects for Africa and Other Regions

Download PDF (296.8 KB) PP. 244 - 257 Pub. Date: November 7, 2017

DOI: 10.22606/jaef.2017.24005

Author(s)

Solomon Abayomi OLAKOJO^*
Department of Economics University of Ibadan, Ibadan, Nigeria

Abstract

Research and Development (R&D) expenditure in most African countries is low. This study investigates the impact of R&D on economic performance of 23 African countries between 1995 and 2014. It also compares selected Africa countries with 25 countries across South America, Asia and Organization of Economic Co-operation and Development (OECD). A new growth model, incorporating R&D, was estimated with two-stage least squares (2SLS) fixed and random effect panel regression. The results show that R&D enhances real output in Africa with elasticity of 0.01%. Other regressors such as investment, savings and labour also enhance output performance with elasticities of 0.39%, 0.05%, and 0.35%, respectively. There were variations across estimations involving other regions. African countries need to provide adequate funding for research and mobilize domestic resources through savings and investment to become growth pillars.

Keywords

Africa, R&D investment, economic performance.

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