Industry impact on GDP growth in developed countries under R&D investment conditions

Abstract

Industry impact on GDP growth is widely discussed in the light of industrial revolution that was raised as the first wave of innovations, and in broad line of theoretical and empirical research papers after. Although, the problem of R&D investment, industrial structure and its impact on GDP growth is still under discussion and requires much deeper investigation in the light of globalization. This paper proved the hypotheses that growth of industry share in gross value added in well-developed industrial countries where GDP per capita is higher has a higher impact on GDP growth in comparison to industrial countries where GDP per capita is at a lower level under business-financed R&D investment conditions. In addition, multiplication effect of business-financed R&D investment and its impact on economic growth depend on industrial country economic development level. Research limitation is a lack of investigation on industry structures of OECD industrial countries with a lower GDP per capita. Estimations show that even if manufacturing structures of countries with lower GDP per capita reflect fully or partially manufacturing structures of well-developed economies, their industries have no the same impact on economic growth. Therefore, OECD industrial countries with lower GDP should make efforts on improvement of their manufacturing structures by raising their quality, changing their supply chain and focusing them on high added value activities and transferring the other activities to less developed countries. The panel least squares method was applied for the estimations. Annual data for period 2014-2017 of 36 OECD countries was used for modeling.