Exploring the Link between Human Capital, R&D, Productivity, and their Growth Effects in Emerging and Developing Economies

This study investigates the interlinkages between human capital, research and development (R&D) investment, productivity, and economic growth in a panel of 60 emerging and developing economies from 2000 to 2023. Employing a system-GMM estimator to address endogeneity, the study finds that the direct effects of R&D and industrial productivity on growth are often weak or negative. However, the analysis reveals crucial complementarity roles. Human capital acts as a pivotal moderator, unlocking the growth potential of innovation. The positive and significant interaction terms show that R&D expenditure boosts economic performance only when coupled with a skilled workforce. This moderating effect is particularly pronounced in medium- and high-tech industries, which possess a stronger absorptive capacity. The findings highlight that pursuing innovation or industrial upgrading in isolation yields limited returns. For emerging and developing economies, strategic policy must therefore integrate targeted investments in skill development with technology adoption incentives to foster sustainable, productivity-driven growth.