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An analysis of the paradox in R&D. Insight from a new spatial heterogeneity model

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  • Yu, Haijing
  • Devece, Caarlos
  • Martinez, José Manuel Guaita
  • Xu, Bing

Abstract

The relationship between research and development (R&D) and economic growth is a hot topic. Most research indicates that R&D leads to innovation, which is conducive to economic growth. However, some scholars hold a different opinion, alleging that high R&D investment will not bring high economic growth. This scenario is also known as the Swedish paradox. We develop a new spatial heterogeneity model in the form of a mixed geographically weighted panel regression with spatial Durbin model (MGWPR-SDM). Using this model, we add to the debate over the possible existence of a Swedish paradox in China. The results show that the impact of aggregate R&D expenditure on economic growth follows an inverted U-shaped curve. The Swedish paradox appears after a threshold is reached, mainly due to business enterprise R&D expenditure rather than government R&D investment. However, from the perspective of R&D input per unit GDP, the impact of R&D intensity on economic growth is U-shaped, and the Swedish paradox occurs before the threshold is reached. Finally, the effect of government R&D expenditure and business enterprise R&D expenditure on economic growth has significant spatial heterogeneity.

Suggested Citation

  • Yu, Haijing & Devece, Caarlos & Martinez, José Manuel Guaita & Xu, Bing, 2021. "An analysis of the paradox in R&D. Insight from a new spatial heterogeneity model," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:tefoso:v:165:y:2021:i:c:s004016252031297x
    DOI: 10.1016/j.techfore.2020.120471
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    Cited by:

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    3. Dai, Lu & Zhang, Jiajun & Luo, Shougui, 2022. "Effective R&D capital and total factor productivity: Evidence using spatial panel data models," Technological Forecasting and Social Change, Elsevier, vol. 183(C).

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