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04-04-2015

Exploring the link between research and economic growth: an empirical study of China and USA

Authors: Ronald Ravinesh Kumar, Peter Josef Stauvermann, Arvind Patel

Published in: Quality & Quantity | Issue 3/2016

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Abstract

In this paper, we explore the link between scientific and technical research and economic growth in China and USA over the sample period 1981–2012 using the extended Cobb–Douglas model with capital per worker and the quantity of scientific and technical journal articles (research publications) per worker. We examine the cointegration relationship and present the short-run and long-run results using the autoregressive distributed lag bounds procedure. Further, we examine the direction of causality between research publications per worker results and economic growth variables using the Toda and Yamamoto (J Econom 66(1–2):225–250, 1995) procedure. Our results indicate for both countries research publications per worker positively influence the output per worker both in the short-run and the long-run. The causality results for China indicate a bi-directional causality between research publications per worker and output per worker, duly emphasizing the mutually reinforcing effect. In case of USA, we note a unidirectional causation output per worker to research publications per worker indicating that output Granger cause research publications.

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For example the bonus for the main author of a publication in Science or Nature amounts to $32,566 at the Zhejiang University (own calculation based on Shao and Shen 2011).

It must be noted that the study of Franzoni et al. (2011) take only the journal Science for the period 2000–2009 into account.

We thank the anonymous reviewer for raising this point.

Note that if a Cobb–Douglas function is used, the form of neutrality of technical progress (Harrod-neutral, Solow-neutral, and Hicks-neutral) does not play a role since the effect remains the same.

Note the choice of δ and $ K_{0} $, are arbitrarily determined as long as the output per worker and capital per worker exhibit diminishing returns to scale, and hence the steady-state convergence.

We thank the anonymous reviewers for suggesti to use research output per capita (or worker) to appropriately model and estimate the impact of research in explaining the growth of the two economies.

Our result for China is in contrast to Inglesi-Lotz et al. (2015), which find no causality between research output and GDP for China.

Our result for USA is similar to Inglesi-Lotz et al. (2014), which find a unidirectional causation from research output to GDP.

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Title: Exploring the link between research and economic growth: an empirical study of China and USA
Authors: Ronald Ravinesh Kumar
Peter Josef Stauvermann
Arvind Patel
Publication date: 04-04-2015
Publisher: Springer Netherlands
Published in: Quality & Quantity / Issue 3/2016
Print ISSN: 0033-5177
Electronic ISSN: 1573-7845
DOI: https://doi.org/10.1007/s11135-015-0191-3

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