Does R&D, human capital and FDI matter for TFP in OECD countries?. Issue 4 (19th May 2019)

• Record Type: Journal Article
• Authors: Tsamadias, Constantinos; Pegkas, Panagiotis; Mamatzakis, Emmanuel; Staikouras, Christos
• Is Part Of: Economics of innovation and new technology. Volume 28:Issue 4(2019)
• Page Start: 386
• Page End: 406
• Publication Date: 2019-05-19
• Subjects: R&D -- Human capital -- FDI -- total factor productivity -- OECD -- panel data; C33 -- F21 -- H63 -- I25 -- O30 -- O40; Technological innovations -- Economic aspects -- Periodicals; 338.06405
• DOI: 10.1080/10438599.2018.1502394
• Languages: English
• ISSNs: 1043-8599

Abstract

ABSTRACT: This study investigates the interplay between research and development (R&D), human capital (HC), foreign direct investment (FDI) and total factor productivity (TFP) in OECD countries. We divide the sample into two sub-groups; the European and the non-European states so as to account for underlying country heterogeneity. The analysis follows a panel data approach over the period 1995–2015, taking into account the modelling on non-stationarity, long-run relationships and short-run dynamics with a panel VAR. Both R&D and HC have a positive effect on TFP, whilst FDI has a positive and significant effect only in the case of non-European countries. Moreover, the contribution of R&D is higher than that of HC and FDI in all cases. Thus, based on these findings, policymakers should design and implement policies to increase resources invested in R&D, with a consistent ongoing spending review, to attract foreign direct investment, especially for the majority of the European and some of the non-European countries and to improve education system on a more productive innovation and research base.