The Role of Research and Development Expenditure on GDP Growth: Selected Cases of ASEAN 5 Plus 4 Asia Major Countries

Nailul Huda, Izzudin Al Farras Adha, Siti Rizqi Ashfina R. S | 01/07/2020 | Halaman telah dikunjungi 37 kali

Innovation plays an important role in increasing productivity, economic growth, and social welfare. One strategy for fostering innovation is to increase research and development funding. However, the strategy to increase research and development funds is very dependent on the conditions of the country and the surrounding area. One of them is the ASEAN region and the 4 main Asian countries where each country has its own policies in increasing research and development funding. This study intends to examine how the role of research and development funds on economic growth in ASEAN-5 countries (Indonesia, Malaysia, Thailand, Singapore, and Vietnam) and four main Asian countries (China, Japan, South Korea, and India). This study uses a panel data model with 5 regression methods, namely First Difference GMM, GMM System, Polled Least Square, Fix Effect, and Random Effect. The results of this study are The research finds that R&D expenditure statistically significant and positive impact to economic growth in those 9 countries which the majority of that countries are developing countries. We also show that the control variables (investment, FDI, Patent, TFP, Labor) significantly correlated with economic growth. Based on the result of 5 regression method, Government needs to increase R&D expenditure through tax incentives because tax incentives have a positive and significant impact on R&D expenditure.

Download Working Paper