Abstract:
This study sought to determine the influence of research and development and Foreign Direct
investment on economic growth. Specific objectives of this study were to determine the
interconnectedness between Research and Development Spending and Foreign Direct
Investment; to determine the influence of Research and Development Spending on economic
growth and to determine the influence of foreign direct investment on economic growth. This
study adopted the neoclassical Theory and the theory on the impact of Research and
Development. Casual research design was employed in this research. The research approach
was quantitative. The study population covered all countries around the globe and for the
purpose of this study, the sample was taken from all countries in the globe for yearly range
data of 1999 to 2018. The method of data collection was from secondary data. The data was
analysed hierarchical multiple regression with help of SPSS computer software. Result
showed that Research and Development Spending has moderate relationship with economic
growth. Results revealed that Foreign Direct Investment has moderate relationship with
economic growth. Also, findings showed Research and Development Spending had moderate
relationship with Foreign Direct Investment. Moreover, findings indicated that Foreign Direct
Investment had moderate the relationship with Research and Development Spending. This
study concluded that the countries should concentrate on Research and Development
Spending to achieve the sustained economic growth and Foreign Direct Investment is integral
to the economy growth of countries. Also, this study concludes that if a country‟s Research
and Development Spending is high, in that situation, the national competitiveness and
investment of this country would be much higher than in other countries. The study concludes
that Foreign Direct Investment on R&D spending speed up their high-tech development and
the R&D stock in the host country. The study recommends that future researchers may
investigate the effect of omitted variables to establish their real impact on Research and
Development Spending, Foreign Direct Investment and Economic growth for instance, the
effect of inflation and institutional quality on economic growth. Additionally, assessment should
be done to address the challenges that are faced by developing countries in their attempts to
improve their economies.
