Impact of technological progress on economic growth in developed countries. Accounting for model uncertainty and reverse causality

Abstract

The aim of this paper is to analyse the relationship between the
determinants of technological innovation and economic growth. Moreover,
it is aimed at examining whether expenditures on R&D variable has
a stronger impact on economic growth, comparing to other determinants of
technological development. The primary reason to choose the topic is that we
are living in a century of notable technological change and investigating the
relationship between technology progress and economic development is the
way to find new methods of accelerating economic growth. The literature on
this topic is extremely rich and many authors claim that the main driver of
long-term economic growth is technological innovation. Furthermore, over
the previous fifty years, a key financial finding has been that technological
progress is crucial to long-term economic growth. This paper uses panel data
for 19 developed countries over the period of 45 years (1973–2017) to examine
the effect of such variables as expenditures on R&D, panel applications and
R&D personnel on GDP per capita. The paper uses panel Bayesian Model
Averaging under weak exogeneity. The results obtained show that all three
indicators of technological innovation have a positive impact on per capita
GDP and that expenditures on R&D have the strongest effect on economic
growth.