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The impact of research and development on total factor productivity in South Africa: an application of autoregressive distributed lag model approach

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  • Tshepo Sekaiwa
  • Andrew Maredza

Abstract

This study analyses the impact of research and development (R%D) on total factor productivity (TFP) in South Africa from 1970 to 2013. The study tests the Schumpeterian theory of growth which suggests that TFP growth results from interalia R%D. The study uses autoregressive distributed lag (ARDL) procedure to study TFP impact of R%D investment in South Africa. To take into account the changing structure of South African economy, the entire sample (1970-2013) and two sub-samples: 1970-1994 and 1990-2013 capturing resource-based and knowledge-based South Africa respectively are estimated. The ARDL test results revealed that cointegration exists between TFP and R%D for all the samples; implying that domestic and foreign R%D played a positive role on TFP growth of South Africa. Based on the results, the South African policy makers are encouraged to use policy instruments to improve R%D investment, particularly domestic R%D to achieve higher TFP growth.

Suggested Citation

  • Tshepo Sekaiwa & Andrew Maredza, 2018. "The impact of research and development on total factor productivity in South Africa: an application of autoregressive distributed lag model approach," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 20(4), pages 453-484.
    • Handle: RePEc:ids:gbusec:v:20:y:2018:i:4:p:453-484
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