R&D expenditures by field of science and GDP: Which causes which in Canada?

Bayram Veli Doyar


This paper attempts to reveal the relationship between GDP per capita and R&D expenditure per capita, R&D expenditure per capita on natural sciences and engineering, and R&D expenditure per capita on social sciences and humanities for Canada. Based on data from 1981 to 2014, bootstrap causality test proposed by Hacker and Hatemi-J (2006) show that there is a unidirectional causality from GDP per capita to R&D expenditure per capita, and a unidirectional causality from GDP per capita to R&D expenditure per capita on natural sciences and engineering. However, no causal relationship is observed between R&D expenditure per capita on social sciences and humanities and GDP per capita. These results may point an indirect relationship between the variables or the validity of R&D paradox and the European paradox for Canada.

Full Text:



Arrow, K. J. (1962) The Economic Implications of Learning by Doing, The review of economic studies, 29(3), 155-173.

Bozkurt, C. (2015) R&D Expenditures and Economic Growth Relationship in Turkey, International Journal of Economics and Financial Issues, 5(1), 188.

Çetin, D., and Doyar, B. V. (2015) Effect of R&D Expenditures on Value Added in OECD Countries, In 17th International Symposium on Econometrics, Operations Research and Statistics, 11-12.

Çetin, M. (2013) The Hypothesis of Innovation-Based Economic Growth: A Causal Relationship, International Journal of Economic and Administrative Studies, (11), 1-16.

Dickey, D. A. and Fuller, W. A. (1981) Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root, Econometrica, 49(4), 1057-1072. doi: 10.2307/1912517.

Granger, C. W. J. (1969) Investigating Causal Relations by Econometric Models and Cross-Spectral Methods, Econometrica, 37(3), 424-438. doi: 10.2307/1912791.

Granger, C. W., and Newbold, P. (1974) Spurious regressions in econometrics, Journal of econometrics, 2(2), 111-120. doi: 10.1016/0304-4076(74)90034-7.

Güloğlu, B., and Tekin, R. B. (2012) A Panel Causality Analysis of the Relationship Among Research and Development, Innovation, and Economic Growth in High-Income OECD Countries, Eurasian Economic Review, 2(1), 32-47. doi: 10.14208/BF03353831.

Hacker, R. S. and Hatemi-J, A. (2005) A test for multivariate ARCH effects, Applied Economics Letters, 12(7), 411-417. doi: 10.1080/13504850500092129.

Hacker, R. S. and Hatemi-J, A. (2006) Tests for Causality Between Integrated Variables Using Asymptotic and Bootstrap Distributions: Theory and Application, Applied Economics, 38, 1489-1500. doi: 10.1080/00036840500405763.

Hacker, R. S. and Hatemi-J, A. (2008) Optimal Lag Length Choice in the Stable and Unstable VAR Models under Situations of Homoscedasticity and ARCH, Journal of Applied Statistics, 35(6), 601-615. doi: 10.1080/02664760801920473.

Hacker, R. S. and Hatemi-J, A. (2009a) HHtest: GAUSS Module to Implement Bootstrap Test for Causality with Leverage Adjustments, Statistical Software Components G00005, Boston College Department of Economics.

Hacker, R. S. and Hatemi-J, A. (2009b) LagOrder: GAUSS module to determine the optimal lag order in the VAR model based on Information Criteria, Statistical Software Components G00008, Boston College Department of Economics.

Hacker, R. S. and Hatemi-J, A. (2009c) MV-ARCH: GAUSS module to implement the multivariate ARCH test, Statistical Software Components G00009, Boston College Department of Economics.

Hanel, P. (2000) R&D, Interindustry and International Technology Spillovers and The Total Factor Productivity Growth of Manufacturing Industries in Canada, 1974-1989, Economic Systems Research, 12(3), 345-361. doi: 10.1080/09535310050120925.

Hannan, E. J. and Quinn, B. G. (1979) The determination of the order of an autoregression, Journal of the Royal Statistical Society. Series B (Methodological), 190-195.

Hatemi-J, A. (2003) A New Method to Choose Optimal Lag Order in Stable and Unstable VAR Models, Applied Economics Letters, 10(3), 135-137. doi: 10.1080/1350485022000041050.

Hatemi-J, A. (2008) Forecasting Properties of a New Method to Determine Optimal Lag Order in Stable and Unstable VAR models, Applied Economics Letters, 15(4), 239-243. doi: 10.1080/13504850500461613.

Lucas Jr, R. E. (1988) On the mechanics of economic development, Journal of monetary economics, 22(1), 3-42. doi: 10.1016/0304-3932(88)90168-7.

Maradana, R. P., Pradhan, R. P., Dash, S., Gaurav, K., Jayakumar, M. and Chatterjee, D. (2017) Does Innovation Promote Economic Growth? Evidence from European Countries, Journal of Innovation and Entrepreneurship, 6: 1. doi: 10.1186/s13731-016-0061-9.

OECD (2018) OECD Statistics. (accessed 25 May, 2018) http://stats.oecd.org/.

Peng, L. (2010) Study on Relationship between R&D Expenditure and Economic Growth of China, In Proceedings of the 7th International Conference on Innovation & Management, 1725-1728.

Phillips, P. C. B. and Perron, P. (1988) Testing for a Unit Root in Time Series Regression, Biometrika, 75(2), 335-346. doi: 10.2307/2336182.

Romer, P. M. (1990) Endogenous Technological Change, Journal of Political Economy, 98(5, Part 2), 71-102. doi: 10.1086/261725.

Sadraoui, T., Ali, T. B., and Deguachi, B. (2014) Economic Growth and International R&D Cooperation: A Panel Granger Causality Analysis, International Journal of Econometrics and Financial Management, 2(1), 7-21. doi: 10.12691/ijefm-2-1-2.

Schwarz, G. (1978) Estimating the Dimension of a Model, The Annals of Statistics, 6(2), 461-464.

Sims, C.A., Stock, J. H. and Watson, M. W. (1990) Inference in Linear Time Series Models with Some Unit Roots, Econometrica, 58(1), 113-144. doi: 10.2307/2938337.

Solow, R. M. (1956) A Contribution to The Theory of Economic Growth, The quarterly journal of economics, 70(1), 65-94. doi: 10.2307/1884513.

Swan, T. W. (1956) Economic Growth and Capital Accumulation, Economic Record, 32(2), 334-361. doi: 10.1111/j.1475-4932.1956.tb00434.x.

Sylwester, K. (2001) R&D and economic growth, Knowledge, Technology & Policy, 13(4), 71-84. doi: 10.1007/BF02693991.

Toda, H.Y. and Yamamoto, Y. (1995) Statistical Inference in Vector Autoregressions with Possibly Integrated Processes, Journal of Econometrics, 66, 225-250. doi: 10.1016/0304-4076(94)01616-8.

Tuna, K., Kayacan, E. and Bektaş, H. (2015) The Relationship Between Research & Development Expenditures and Economic Growth: The case of Turkey, Procedia-Social and Behavioral Sciences, 195, 501-507. doi: 10.1016/j.sbspro.2015.06.255.

Ülkü, H. (2004) R&D, innovation, and Economic Growth: An Empirical Analysis (No. 4-185). International Monetary Fund.

Wakelin, K. (2001) Productivity Growth and R&D Expenditure in UK Manufacturing Firms, Research Policy, 30(7), 1079-1090. doi: 10.1016/S0048-7333(00)00136-0.

Wang, J. C., and Tsai, K. H. (2004) Productivity Growth and R&D Expenditure in Taiwan's Manufacturing Firms, In Growth and Productivity in East Asia, NBER-East Asia Seminar on Economics, 13, 277-296.

World Bank (2018) World Development Indicators. (accessed 25 May, 2018) http://databank.worldbank.org.

Wu, Y., Zhou, L. and Li, J. X. (2007) Cointegration and Causality Between R&D Expenditure and Economic Growth in China: 1953-2004, In International Conference on Public Administration, 76.

Yang, C. H. (2006) Is innovation the story of Taiwan's economic growth?, Journal of Asian Economics, 17(5), 867-878. doi: 10.1016/j.asieco.2006.08.007.

DOI: https://doi.org/10.17811/ebl.8.1.2019.%25p


  • There are currently no refbacks.

ISSN: 2254-4380