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Procedia Computer Science 158 (2019) 1122–1130

3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE)

3rd World Conference on Technology, Innovation and Entrepreneurship (WOCTINE)
Innovation and Economic Growth in Developing Countries:
Innovation
Empirical and Economic
Implication GrowthRandom
of Swamy’s in Developing Countries:
Coefficient Model
Empirical Implication of Swamy’s
(RCM) Random Coefficient Model
(RCM)
Aynur Pala1
Aynur Pala1

Abstract
Abstract
This study aims to investigate the impact of technology on economic growth in selected 25 developing countries using
random
This coefficient
study model (RCM).
aims to investigate We reduced
the impact five technology
of technology on economicvariables
growthtoinR&D expenditure
selected and number
25 developing of R&D
countries using
researchers
random using factor
coefficient modelanalysis
(RCM).method. We applied
We reduced homogeneity,
five technology cross-sectional
variables dependence,
to R&D expenditure panel
and unit-root
number test
of R&D
and cointegration
researchers tests. As
using factor a result
analysis of model,
method. We there arehomogeneity,
applied negative significant effect of dependence,
cross-sectional R&D expenditure
panel on economic
unit-root test
growth
and in China, tests.
cointegration Egypt,AsIran, Moldova,
a result Panama,
of model, Serbia
there are and Uzbekistan.
negative In Iran,
significant effect Mexico,
of R&D Tunusia,on
expenditure Uzbekistan,
economic
number in
growth of R&D
China,researchers hasMoldova,
Egypt, Iran, significantly negative
Panama, effectand
Serbia on Uzbekistan.
economic growth.
In Iran,OnMexico,
the contrary number
Tunusia, of R&D
Uzbekistan,
researchers
number has significantly
of R&D researchers positive effect onnegative
has significantly economic growth
effect in only Ukraine,
on economic growth.Turkey,
On theRussia andnumber
contrary China. of R&D
researchers has significantly positive effect on economic growth in only Ukraine, Turkey, Russia and China.
Author(s).Published
© 2019 The Authors. PublishedbybyElsevier
ElsevierB.V.
B.V.
Peer-review
Peer-review under
under responsibility
responsibility
© 2019 The Author(s). Published byof the
the scientific
ofElsevier B.V. committee
scientific committee of
of the
the 3rd World Conference
3rd World Conference on
on Technology,
Technology, Innovation
Innovation and
and
Entrepreneurship
Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and
Entrepreneurship
Entrepreneurship
Keywords: R&D expenditure, number of R&D researcher, economic growth and panel random coefficient model.
Keywords: R&D expenditure, number of R&D researcher, economic growth and panel random coefficient model.

1. Introduction
1. Introduction
Capital, labor force and technology/innovation are factors of leading economic growth. Technological change and
innovation
Capital,are theforce
labor mainand
driver of economic growth.
technology/innovation areRomer
factors(1990), Grossman
of leading economic andgrowth.
Helpman (1991) and Aghion
Technological change and
Howitt (1992)
innovation are argued
the mainendogenous growth theory,
driver of economic growth.proved
Romereconomic
(1990), growth
Grossmanis driven by technological
and Helpman (1991) andchange.
AghionIn and
the
innovation-based
Howitt growth
(1992) argued hypothesis,
endogenous R&Dtheory,
growth has a important role in innovation
proved economic growth is and rising
driven economic growth.
by technological Research
change. In the
and development growth
innovation-based (R&D) hypothesis,
expenditureR&D is a key
has aindicator
importantof role
innovative activities
in innovation andfor countries.
rising economicIn 2015, total
growth. world
Research
R&Ddevelopment
and expenditures(R&D)
were 1.750 trillion is
expenditure dollars,
a keywhich wasof
indicator a 8.15% (1.618
innovative trillion for
activities dollars) on theInyear
countries. before.
2015, totalThe 10
world
largestexpenditures
R&D R&D spending countries
were of 2015dollars,
1.750 trillion accounted
which forwas
1.480 trillion(1.618
a 8.15% dollarstrillion
in R&D expenditures,
dollars) about
on the year 84.6%The
before. of the
10
largest R&D spending countries of 2015 accounted for 1.480 trillion dollars in R&D expenditures, about 84.6% of the
1
* Aynur Pala. Tel.05323442094.
1 E-mail address: aynur.pala@okan.edu.tr
* Aynur Pala. Tel.05323442094.
E-mail address: aynur.pala@okan.edu.tr
1877-0509 © 2019 The Author(s). Published by Elsevier B.V.
Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship
1877-0509 © 2019 The Author(s). Published by Elsevier B.V.
Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship

1877-0509 © 2019 The Authors. Published by Elsevier B.V.

Peer-review under responsibility of the scientific committee of the 3rd World Conference on Technology, Innovation and Entrepreneurship
10.1016/j.procs.2019.09.252
 Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130 1123
2 Aynur Pala / Procedia Computer Science 00 (2019) 000–000

global total.

This study aims to investigate the impact of innovation on economic growth in selected 25 developing countries
using random coefficient model (RCM). And, to choice the best proxy to measure innovation/technology indicators.
We will use R&D expenditures, patents, research articles, researchers and technicians employed in R&D departments
as measurement instruments for innovation/technology. We reduced innovation/technology variables using factor
analysis method. We applied homogeneity, cross-sectional dependence, panel unit-root test and cointegration tests.
And, it will be estimated panel random coefficient model.

2. Literature Reviews

According to Smith (1776) investigate the analysis of technological change. Solow (1957) suggests that technical
change is reason the most of economic growth. Endogenous growth model investigated the relation between
innovation behaviour and economic growth. Romer (1990), Rebelo (1991), Grossman and Helpman (1991) and
Aghion and Howitt (1992) has revealed the importance of technological capital on economic growth. Rising research
and development expenditures will result a permanently higher growth rates. Aghion and Howitt (1992) found R&D
activities can lead to innovations and momentum of the innovation process is the main factor of economic growth.
Howitt (1999) show there is a positive relation between R&D capital and GDP.
Birdsall and Rhee (1993) used cross-country growth regression and found that there is a positive relation between
R&D expenditure and economic growth in OECD countries. Lichtenberg (1993) investigated the relationship between
R&D expenditures and economic growth in both the private and public sectors of 74 countries period for 1964-1989.
They found that there is no relationship between R&D expenditures and economic growth in the public sector.
Otherwise, R&D expenditures positively affected on economic growth in the private sector. Gittleman and Wolff
(1995) proved the relationship between R&D activities and economic growth using panel data period of 1960-1988.
Their study showed that R&D activities has significant for economic growth in developed countries. Ayres (1996)
showed that technological development, especially in the area of information technology, has negative impact on
economic growth. Nadiri and Kim (1996) examined the effect of R&D spillover on TFP growth in seven largest
economies. They found that the effect of R&D spillover differ across countries. Aiginger and Falk (2005) examine
that factors of GDP per capita using panel data model in OECD countries. They found statistically significant positive
impact of business R&D intensity on GDP per capita. Yanrui (2010) examines the impact of R&D activities on
innovation and economic growth in China. Results show innovation activities has positive affect on growth.
Braconier (2000) investigated the relation between per capita income and R&D expenditures in ten OECD member
countries fort he period 1973- 1992. The study showed that per capita income level has positive effect on R&D
expenditures. Bialbao-Osorio and Rodriguez-Pose (2004) analyzed that patents has a negative effect on growth rates.
Findings suggest the evidence of catch up process, in line with the neoclassical growth theory. Samimi and Alerasoul
(2009) argued that the impact of R&D expenditures on economic growth using panel data analysis in thirty developing
countries including Turkey. They found that R&D expenditures did not contribute to growth in developing countries.
Mehran and Reza (2011) proved the effect of R&D expenditures on economic growth in underdeveloped countries
and OECD countries using the fixed effects panel data model. They found that R&D expenditures has positive impact
on economic growth in both country groups. Guloglu and Tekin (2012) investigated the relationship among R&D
expenditures, innovation, and economic growth for OECD countries with higher income level countries using a panel
causality analysis. They presented that there is positive relation between R&D and economic growth and innovation
and economic growth. Huňady and Orviska (2014) researched the impact of R&D expenditures on the economic
using panel data regression in 26 EU countries. Results showed there is a positive impact of R&D expenditures on the
economic growth. Ozcan and Arı (2014) analysed the link between R&D expenditures and economic growth 15-
OECD countries. As a results of the study, R&D expenditures positively effect on economic growth in 7 OECD
countries. However, R&D expenditures negatively effect on economic growth in Germany, Netherland, Spain, and
England. Kokko et al. (2015) showed that the effect of R&D expenditures on economic growth are negative and
significant in high R&D EU and low R&D EU countries. Tuna et al. (2015) examined the relation between R&D
expenditures and economic growth in Turkey for the period of 1990 to 2013. It is found that there is no causality
relationship between R&D expenditures and economic growth.
Petrariu et al. (2013) investigated link between innovation and economic growth in the Central and Eastern
European countries (CEE) for the period of 1996-2010 by using pooled data regression. They show that R&D spending
1124 Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130
Aynur Pala / Procedia Computer Science 00 (2019) 000–000 3

level and the number of patents are significant but have a negative coefficient. This suggests the existence of a catch-
up process, which is typical for the neoclassical growth theory. Zachariadis (2003) studied that R&D intensity relates
to patenting, patenting to technological progress and technological progress to economic growth. Results showed that
there is a positive impact between R&D expenditures, patenting and productivity.
Number of employees in the R&D department is one of the most important indicators of innovation. Romer (1989)
found positive link between the number of R&D scientists and the economic growth in developed economies.
Bayarcelik and Tasel (2012) analyses the relation between R&D expenditures, number of R&D employees, number
of patents as an indicator of innovation and economic growth. They used panel regression model in Turkey for the
period 1998-2010. Results show positive and significant relation between R&D expenditure and number of R&D
employees and economic growth. Contrary, correlation between the number of patents and economic growth is
negative.
Ahmad and Seyede (2009) investigated the impact of R&D on economic growth in developing countries. The
findings imply that there is no significant relationship government R&D expenditure, researchers, articles and
economic growth. Inglesi-Lotz et al. (2015) investigated the relationship between research output and economic
growth in BRIC’s and found the bidirectional causality in India. Ntuli et al. (2015) examined the causal relationship
between economic growth and research output in OECD countries and found research–led growth.
The purpose of this paper is to examine the relationship between innovation and economic growth in developing
countries for the period of 1996-2016.

3. Data and Methodology

3.1. Data
The research examined the ralation between R&D expenditures, number of patents, number of employees
(scientists and engineers) in R&D departments and scientific and technical journal articles measurement instruments
for innovation intensity and economic growth. This study covered 25 developing countries for the period of 1996-
2016.
Table 1. List of Developing Countries
Developing Countries
Argentina Kazakhstan Serbia
Brazil Madagascar South Africa
Bulgaria Malaysia Thailand
China Mexico Tunisia
Colombia Moldova Turkey
Costa Rica Pakistan Ukraine
Egypt Panama Uzbekistan
India Romania
Iran Russian Fed.

We used GDP growth (annual %), Gross fixed capital formation (annual % growth), Labor force participation rate,
total (% of total population ages 15+), Patent applications (residents), Scientific and technical journal articles, R&D
expenditure (% of GDP), Researchers in R&D (per million people), Technicians in R&D (per million people)
variables. Data collected from World Bank.

Table 2. Variables Code, Name and Sources

Code Variables Name Source
GDP GDP growth (annual %) World Bank, OECD
GFC Gross fixed capital formation (annual % growth) World Bank, OECD
Labor force participation rate, total (% of total
LFPR World Bank, ILO
population ages 15+) (modeled ILO estimate)
PATENT Patent applications, residents World Bank, World Intellectual Property Organization (WIPO)
RDEXP Research and development expenditure (% of GDP) World Bank, UNESCO Institute for Statistics
RDRES Researchers in R&D (per million people) World Bank, UNESCO Institute for Statistics
ARTICLES Scientific and technical journal articles World Bank, National Science Foundation
RDTECH Technicians in R&D (per million people) World Bank, UNESCO Institute for Statistics

Innovation variables reduced less factors and selected variables taken biggest factor loading using factor analysis
 Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130 1125
4 Aynur Pala / Procedia Computer Science 00 (2019) 000–000

method. Patent applications (residents), Research and development expenditure (% of GDP), Scientific and technical
journal articles, number of researchers in R&D (per million people), number of technicians in R&D (per million
people) variables was reduced two factor. Patent, R&D expenditure and articles located in Factor 1. We selected R&D
expenditure which has the biggest factor loading with 0.81 for Factor 1. Researchers and technicians located in Factor
2. Researchers which has the biggest factor loading with 0.74 was selected second innovation proxy.

Studies used R&D expenditure and number of researcher in R&D as a proxy for innovation are as follows:
Hoskisson Hitt (1988) have used R&D expenditure as a proxy for technological capabilities. Deprez and Harvey
(1999) used patents or R&D expenditures as a proxy for technology. Archibugi and Pianta (1996), Smith (2005),
Hanel and Zorgati (2001) use the R&D expenditure as a proxy for technology. Bayarcelik and Tasel (2012) analyzed
the link between indicators of innovation, likes R&D expenditures, number of employees working in R&D
department, number of patents, and economic growth using panel regression model for the period of 1998 to 2000.

3.2. Methodology

References must be listed at the end of the paper. Do not begin them on a new page unless this is absolutely
necessary. Authors should ensure that every reference in the text appears in the list of references and vice versa.
Indicate references by [1] or [2] or [3] in the text.
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section, which will allow you to assemble your reference list according to the correct format and font size.

In this study, it has been prefered RCM model, because of it provides offer the opportunity to analyse individual
countries. We follow Cobb-Douglas function as below;

𝑌𝑌 = 𝐴𝐴𝐴𝐴 𝛼𝛼 + 𝐿𝐿1−𝛼𝛼 (1)

In Cobb-Douglas function, Y, represent total production, A, represent total factor productivity, K, represent
capital, L, labor force, 𝛼𝛼, output elasticity of capital. If 𝛼𝛼 = 1, production function is linear. Swamy’s random-
coefficients was formed as follows

𝐺𝐺𝐺𝐺𝐺𝐺𝑖𝑖 = 𝛼𝛼𝑖𝑖 + 𝛽𝛽0𝑖𝑖 𝐺𝐺𝐺𝐺𝐺𝐺𝑖𝑖 + 𝛽𝛽1𝑖𝑖 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝑖𝑖 + 𝛽𝛽2𝑖𝑖 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑖𝑖 + 𝛽𝛽3𝑖𝑖 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑖𝑖 + 𝜀𝜀𝑖𝑖 (2)

where i=1....,25, presents developing countries. Where GDP is GDP growth (annual %); GFC is gross fixed capital
formation (annual % growth); LFPR is labor force participation rate, total (% of total population ages 15), RDEXP is
R&D expenditure (% of GDP), RDRES is researchers in R&D (per million people).

4. Results

4.1. Homogeneity

Slope homogeneity test, to determine of whether slope coefficients of the cointegration equation are homogeneous,
developed by Swamy (1970). Pesaran and Yamagata (2008) improved Swamy’s slope homogeneity test and formed
two test statistics; ∆̃ and ∆̃𝑎𝑎𝑎𝑎𝑎𝑎 .

−1 𝑆𝑆̅−𝑘𝑘
̃∆= √𝑁𝑁 (𝑁𝑁 ) ~𝑋𝑋𝑘𝑘2 (for large sample) (3)
√2𝑘𝑘

𝑁𝑁 −1 𝑆𝑆̅ −𝑘𝑘
∆̃𝑎𝑎𝑎𝑎𝑎𝑎 = √𝑁𝑁 ( ) ~𝑁𝑁(0, 1) (for small sample) (4)
𝑣𝑣(𝑇𝑇,𝑘𝑘)
1126 Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130
Aynur Pala / Procedia Computer Science 00 (2019) 000–000 5

N denotes number of cross-section unit; S denotes the Swamy test statistic; k denotes independent variables. If p
value of the test is larger than 5%, the null hypothesis is accepted at a 5% significance level and the cointegration
coefficients are considered homogenous.
We test the hypothesis of slope homogeneity using the test developed by Pesaran and Yamagata (2008). The result
of Pesaran and Yamagata (2008) homogeneity test are presented in Table 3. The tests are performed on the GDP
Growth, gross fixed capital formation, labor force, R&D expenditure and number of researcher in R&D in 25
developing countries using Gauss software.
Table 3. Pesaran and Yamagata (2008) Slope Homogeneity Tests
Slope Homogeneity Tests Δ statistic p value
∆̃ test 1.743*** 0.041
∆̃adj test 2.043*** 0.021
Note: ***, **, and *are the significance for at 1%, 5% and 10% levels.∆̃ test and ∆̃adj
test denote the slope homogeneity tests proposed by Pesaran and Yamagata (2008)

The null hypothesis of slope homogeneity is can be rejected in all cases because the probability values smaller
than 0.05. The slope coefficients are not homogeneous. Heterogeneity exists across sample countries; we should
employ heterogeneous panel techniques.

4.2. Pesaran (2004) Cross-Sectional Dependence (CD) Test

The main problem of panel approach is cross-sectional dependence (CSD). Primarily, it will be decided that
whether cross-sectional dependence (CSD) or not. In CSD case, panel unit-root tests allowed CSD is used. LM test
statistics proved by Breusgh and Pagan (1980) shows substantial size distortion, when T<N.2 Pesaran (2004) cross-
sectional dependence test generated to test for cross-sectional dependence in large-N and small-T panels. In the study,
because T<N, we use Pesaran (2004) cross-sectional dependence test.
Pesaran (2004) cross-sectional dependence (CD) test is suggested the following,3

2𝑇𝑇
𝐶𝐶𝐶𝐶 = √ (∑𝑁𝑁−1 𝑁𝑁
𝑖𝑖=1 ∑𝑗𝑗=𝑖𝑖+1 𝜌𝜌𝑖𝑖𝑖𝑖 ) (5)
𝑁𝑁(𝑁𝑁−1)

and presented that under the null hypothesis of no cross-sectional dependence for large N and small T.

Table 4 shows the results of Pesaran (2004) cross-sectional dependence test statistics. The results present that the
null hypothesis of cross-sectional independence is rejected at significance level p=0.01. Findings require taking
account of cross-section dependence, when applying panel unit-root tests.
Table 4. Cross-sectional Dependence Test
CD (Pesaran, 2004)
FE Model 11.978*** (0.000)
RE Model 11.954*** (0.000)
Note: *** indicate the statistical significance at 1 percent level.

We used Pesaran (2005) Cross-Sectionally Augmented Dickey-Fuller (CADF). CADF is the second-generation
panel unit-root test, that take account of cross-sectional dependence. Table 5 includes CADF test results. Results
indicated that the null hypothesis of unit root can be rejected and all variables are integrated of order 1.4

2
See Pesaran (2004) or Sarafadis, Yamagata and Robertson (2006).
3
The CD test are performed using the STATA routine “xtcsd” proposed by De Hoyos and Sarafidis (2006)
4
See Pesaran (2007) for critic value.
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Table 5. Pesaran’s CADF

Variables t-bar Z
Level
GDP -2.303 -2.820*** (0.002)
GCF -2.824 -5.481*** (0.000)
LFPR -1.676 0.380 (0.648)
RDEXP -1.831 -0.412 (0.340)
RDRES -1.727 0.117 (0.546)
First Difference
DGDP -3.551 -8.879*** (0.000)
DGCF -4.090 -11.518*** (0.000)
DLFPR -2.303 -2.758*** (0.003)
DRDEXP -2.779 -5.091*** (0.000)
DRDRES -2.803 -5.211*** (0.000)
Note: Critical values with trend at 1%, 5% and 10% significance levels are -2.070, -2.150 and - 2.300.

4.3. Westerlund (2007) Panel Cointegration Test

We used Westerlund (2007) to test whether variables are cointegrated. Westerlund (2007) panel cointegration test
showed that the null hypothesis is no cointegration. Table 6 represents the Westerlund (2007) results. Results showed
that variables are cointegrated.

Table 6. Westerlund (2007) Panel Cointegration Test

Statistics Value Z-value
𝐺𝐺𝜏𝜏 -5.451* -19.268* (0.000)
𝐺𝐺𝛼𝛼 -30.382* -13.894* (0.000)
𝑃𝑃𝜏𝜏 -28.199* -20.541* (0.000)
𝑃𝑃𝛼𝛼 -35.900* -22.556* (0.000)
Note: 𝐺𝐺𝜏𝜏 and 𝐺𝐺𝛼𝛼 are group mean tests 𝑃𝑃𝜏𝜏 and 𝑃𝑃𝛼𝛼 panel tests.

4.4. Westerlund and Edgerton (2008) Cointegration Test

We applied the test developed by Westerlund and Edgerton (2008) panel cointegration test allowed for
heteroskedastic and serially correlated errors, cross-sectional dependence and structural breaks in both the intercept
and slope. Cointegration test proposed by Westerlund and Edgerton (2008) based on Gregory and Hansen (1996)
study. Westerlund and Edgerton (2008) define two LM based statistics:
̂
𝜔𝜔
𝐿𝐿𝐿𝐿𝜑𝜑 (𝑖𝑖) = 𝑇𝑇𝜑𝜑̂𝑖𝑖 ( 𝑖𝑖 ) (6)
𝜎𝜎
̂ 𝑖𝑖

̂ 𝑖𝑖
𝜑𝜑
𝐿𝐿𝐿𝐿𝜏𝜏 (𝑖𝑖) = ̂ 𝑖𝑖 )
(7)
𝑆𝑆𝑆𝑆(𝜑𝜑

̂𝑖𝑖2 is the estimated long-run

where 𝜑𝜑̂𝑖𝑖 is the least square estimate of 𝜑𝜑𝑖𝑖 with 𝜎𝜎̂𝑖𝑖 as its estimated standard error, 𝜔𝜔
variance of ∆𝑣𝑣𝑖𝑖𝑖𝑖 and 𝑆𝑆𝑆𝑆(𝜑𝜑̂𝑖𝑖 ) is estimated standard error of 𝜑𝜑̂𝑖𝑖 .

Table 7. Westerlund and Edgerton (2008) Panel Cointegration Test with Structural Breaks Results
Model Zφ (N) Zτ (N)
No Break -4.111*** (0.000) -4.183 *** (0.000)
Level Shift -1.866*** (0.031) -1.529 (0.063)
Regime Shift -4.825*** (0.000) -2.490*** (0.006)
Note: *, **, *** indicate significance at the 10%, 5% and 1% levels, respectively.

In this study, it was used the panel cointegration test proposed by Westerlund and Edgerton (2008). Table 7 shows
the result of Westerlund and Edgerton (2008) panel cointegration test. Test statistics are significant at the 1% level,
except Zτ (N) statistic for level shift. This result implied that the null hypothesis of no cointegration is rejected. There
is a cointegration relationship between variables in cases of cross-sectional dependency and structural breaks.
Therefore, variables move together in the long run.
 Aynur Pala / Procedia Computer Science 00 (2019) 000–000 7
1128 Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130

4.5. Swamy’s Random Coefficient Model

The result of Swamy’s Random Coefficient Model is reported in Table 8. As a result of model, R&D expenditure
has negative significantly effect on economic growth in China, Egypt, Iran, Moldova, Panama, Serbia and Uzbekistan.
Findings that was consistent with Park’s (1995) and Lichtenberg (1993) results. They found that government R&D
expenditure had a negative impact on economic growth. However, R&D expenditure has insignificant impact on
economic growth in the other countries. In Iran, Mexico, Tunusia, Uzbekistan, number of R&D researchers has
significantly negative effect on economic growth. On the contrary, number of R&D researchers has significantly
positive effect on economic growth in Ukraine, Turkey, Russia and China just as Crosby (2000), Sadraoui and Zina
(2009), Ulku (2004) and Zachariadis (2003) studies. Number of R&D researchers is very important for developing
countries economic performance.

Table 8. The Estimation of Swamy’s Random Coefficient Model

Country GFC LFPR RDEXP RDRES C
Developing Countries 0.209* (0.000) -0.062 (0.766) -4.228* (0.046) 0.000 (0.986) 9.504 (0.478)
Wald chi2 (4) 116.06 (0.000)
Argentina 0.299 (0.000) 0.080 (0.857) -2.968 (0.390) 0.001 (0.548) -3.403 (0.904)
Brazil 0.301* (0.000) 0.171 (0.347) -6.412 (0.061) 0.001 (0.477) -3.386 (0.792)
Bulgaria 0.062 (0.100) -0.118 (0.765) -6.597 (0.076) 0.002 (0.511) 8.907 (0.656)
China 0.182* (0.000) -1.129* (0.000) -11.743* (0.000) 0.005* (0.043) 96.978* (0.000)
Colombia 0.183* (0.000) 0.047 (0.515) 2.257 (0.537) 0.003 (0.429) -1.388 (0.752)
Costa Rica 0.195* (0.000) 0.056 (0.775) 1.954 (0.596) -0.002 (0.380) -0.575 (0.961)
Egypt 0.064* (0.011) 0.341 (0.149) -5.355* (0.012) 0.001 (0.810) -10.601 (0.354)
India 0.197* (0.000) -0.172 (0.290) -0.617 (0.879) 0.003 (0.360) 15.224 (0.137)
Iran 0.194* (0.000) 0.866* (0.009) -7.389* (0.056) -0.008* (0.053) -26.596* (0.045)
Kazakhstan 0.253* (0.000) -0.231 (0.588) -4.733 (0.250) -0.006 (0.108) 23.835 (0.434)
Madagascar 0.178* (0.000) -0.264 (0.345) -7.644 (0.080) 0.000 (0.890) 25.520 (0.300)
Malaysia 0.245* (0.000) 0.278 (0.521) -4.024 (0.274) 0.001 (0.745) -10.754 (0.690)
Mexico 0.302* (0.000) 0.081 (0.807) 0.406 (0.899) -0.008* (0.028) -1.332 (0.946)
Moldova 0.171* (0.000) -0.239 (0.310) -9.248* (0.031) 0.000 (0.916) 16.960 (0.114)
Pakistan 0.144* (0.000) 0.221 (0.564) 0.176 (0.947) -0.004 (0.484) -7.393 (0.698)
Panama 0.167* (0.000) -0.383 (0.243) -8.222* (0.034) 0.004 (0.066) 30.503 (0.152)
Romania 0.190* (0.000) -0.161 (0.342) -6.548 (0.098) -0.002 (0.724) 15.743* (0.051)
Russian Fed. 0.379* (0.000) 0.260 (0.367) -0.314 (0.920) 0.007* (0.001) -35.905 (0.117)
Serbia 0.169* (0.000) 0.003 (0.994) -9.689* (0.006) 0.001 (0.823) 7.323 (0.733)
South Africa 0.206* (0.000) -0.452 (0.140) 0.606 (0.788) 0.000 (0.990) 25.595 (0.119)
Thailand 0.256* (0.000) -0.471 (0.198) -1.985 (0.602) -0.004 (0.136) 39.314 (0.153)
Tunisia 0.210* (0.000) 0.562 (0.084) 1.923 (0.616) -0.005* (0.000) -19.012 (0.242)
Turkey 0.284* (0.000) 0.155 (0.193) -4.424 (0.207) 0.004* (0.050) -4.978 (0.407)
Ukraine 0.295* (0.000) -1.127* (0.006) -0.146 (0.960) 0.012* (0.005) 47.858* (0.022)
Uzbekistan 0.105* (0.001) 0.075 (0.821) -14.962* (0.000) -0.008* (0.040) 9.170 (0.686)
Note: *, **, *** indicate significance at the 10%, 5% and 1% levels, respectively.

5. Conclusion

This study aims to examine the effect of innovation/technology on economic growth in 25 developing countries
by panel random coefficient model (RCM). We used factor analysis method to reduce innovation variables and have
R&D expenditure and number of R&D researchers as a proxy for innovation. We applied homogeneity, cross-sectional
dependence, panel unit-root test and cointegration tests. As a result of model, there are negative significant effect of
R&D expenditure on economic growth in China, Egypt, Iran, Moldova, Panama, Serbia and Uzbekistan. In Iran,
Mexico, Tunusia, Uzbekistan, number of R&D researchers has significantly negative effect on economic growth. On
the contrary number of R&D researchers has significantly positive effect on economic growth in only Ukraine, Turkey,
Russia and China. The results are differ country to country, as this study confirms negative significant effect of R&D
expenditure on economic growth in China, Egypt, Iran, Moldova, Panama, Serbia and Uzbekistan. In Iran, Mexico,
Tunusia, Uzbekistan. researchers has significantly negative effect on economic growth in Iran, Mexico, Tunusia,
Uzbekistan and positive effect in Ukraine, Turkey, Russia and China.
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Aynur Pala / Procedia Computer Science 158 (2019) 1122–1130 1129

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