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

Abstract

The impact of industry on GDP growth is widely discussed in light of the industrial revolution that arose as the first wave of innovations and has since been a common subject of theoretical and empirical research papers. However, the issue of R&D investment, industrial structure and the impact on GDP growth is still under discussion and requires much deeper investigation under conditions of globalization. The results of this paper supported the hypotheses that growth of the industry share in gross value added has a higher impact on GDP growth in well-developed industrialized countries with high GDP per capita than in industrialized countries whose GDP per capita is at a lower level under business-financed R&D investment conditions. In addition, the multiplier effect of business-financed R&D investment and its impact on economic growth depend on the economic development level of a given industrialized country. The proposed hypotheses suggest that policy makers of less-developed countries should pay more attention to enhancing the quality of industry by introducing appropriate incentives rather than to increasing the share of industry in GDP, with a particular focus on the best practices of well-developed industrialized countries.