The Role of Economic Freedom in Research and Development- Productivity Growth Nexus: Study Based on Different Income Level on Developing Countries

This research focuses on three important issues of economic freedom, domestic and international Research and Development (R&D) and productivity growth by using Panel Dynamic Ordinary Least Square (P-DOLS) proposed by Stock and Watson (1993) in estimating 37 selected developing countries that classified based on income level for time period 2000 to 2010. To encourage domestic and international R&D activities, host and home countries must have a ‘good’ institution like economic freedom. Main focus of this study is on economic freedom that we examine the role of economic freedom as a mediating factor of domestic and international R&D on productivity growth based on different income level on developing countries. The findings indicate that there are mixed results that show positive and negative relationship of the role economic freedom as mediating factor on domestic and international R&D on productivity growth.