R&D expenditure and its macroeconomic effects: A comparative study of Israel and South Caucasus countries

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The impact of research and development (R&D) expenditure is crucial for understanding contemporary economic development strategies. This study investigates the relationship between R&D spending as a percentage of GDP and economic growth, focusing on the South Caucasus countries (Azerbaijan, Georgia, and Armenia) and Israel, which is notable for its substantial R&D expenditure (5.71% of GDP in 2020). The objective is to evaluate the impact of R&D expenditure on economic development through the application of rigorous empirical methods. By employing a quantitative approach, this study aims to offer a detailed analysis of the impact of R&D investment on economic growth across various countries. Ordinary least squares (OLS) regression analyzes the association between R&D expenditure and GDP levels. Granger causality tests are utilized to investigate the causal relationships. The results demonstrate a significant positive relationship between R&D expenditure and GDP across all studied countries. Furthermore, the analysis reveals that GDP growth stimulates increased R&D investments in Azerbaijan and Armenia, as evidenced by Granger causality tests. To sum up, this paper underscores the critical role of R&D spending in driving economic development and highlights the necessity for policy initiatives focused on strengthening R&D frameworks.

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    • Figure 1. Share of R&D expenses in GDP
    • Figure 2. R&D expenses per capita
    • Figure 3. Distinct correlation trend between R&D expenditure and unemployment rate
    • Table 1. Brief overview of studies on R&D and economic development
    • Table 2. Time series unit route test
    • Table 3. The results of the least squares method
    • Table 4. Effects of the logarithm of R&D expenditure on the logarithm of GDP per capita
    • Table 5. Granger causality relationship between LNRD and LNGDPPC
    • Conceptualization
      Mayis Gulaliyev, Ramil Hasanov, Naila Sultanova
    • Data curation
      Mayis Gulaliyev, Ramil Hasanov, Lale Ibrahimli, Narmin Guliyeva
    • Formal Analysis
      Mayis Gulaliyev, Lale Ibrahimli, Narmin Guliyeva
    • Methodology
      Mayis Gulaliyev, Ramil Hasanov
    • Project administration
      Mayis Gulaliyev, Naila Sultanova
    • Software
      Mayis Gulaliyev, Ramil Hasanov
    • Supervision
      Mayis Gulaliyev
    • Validation
      Mayis Gulaliyev, Ramil Hasanov, Naila Sultanova, Lale Ibrahimli, Narmin Guliyeva
    • Writing – original draft
      Mayis Gulaliyev, Ramil Hasanov
    • Writing – review & editing
      Mayis Gulaliyev, Ramil Hasanov, Naila Sultanova, Lale Ibrahimli, Narmin Guliyeva
    • Investigation
      Ramil Hasanov
    • Resources
      Ramil Hasanov, Naila Sultanova, Lale Ibrahimli
    • Visualization
      Ramil Hasanov, Lale Ibrahimli, Narmin Guliyeva
    • Funding acquisition
      Narmin Guliyeva
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Public and Municipal Finance