Interplays among R&D spending, patent and income growth: new empirical evidence from the panel of countries and groups

Industrial houses and governments of different countries and groups spend a sizeable amount of their earnings upon research and development activities to create new products and obtain patents for them. The short-run motive is to get patents, and the long-run motive is to influence income growth of the countries. The empirical findings so far are skeptical on the effects of research and development (R&D) spending. The present study further investigates the long-run associations and short-run dynamics among R&D spending, number of patents and per capita income growth in the panel of countries and groups for the period 1996–2017. Using VAR model for the panel data, the study observes that R&D spending, number of patents and per capita income growth have no long-run equilibrium relations but in the short-run, income growth and number of patents make a cause to R&D spending. However, there are weak causation from patents and R&D spending to income growth rates. The study thus recommends for controlling unfair competition on spending on R&D head and getting patents since it increases the magnitudes of social cost.