Economic Growth and International R&D Cooperation: A Panel Granger Causality Analysis

Abstract

This paper will investigate the Granger causality between R&D cooperation and economic growth in 32 industrial and developing countries from 1970 to 2012. We use an innovative econometric method which is based on a panel test of the Granger non causality hypothesis. Using a new method to evaluate causality in a heterogeneous panel, we find that the causal relationship from R&D cooperation to economic growth is homogeneous among the panel. However, we find strong evidence of a heterogeneity of the causal relationship from economic growth to R&D cooperation in our sample. Results provide support for a robust causality relationship from economic growth to R&D cooperation. On the contrary, the non causality hypothesis from R&D cooperation to economic growth can’t be rejected in most of the cases. However, these results only imply that, if such a relationship exists, it can’t be easily identified in a simply bi-variate Granger causality test.