Research and development spending, foreign direct investment and economic growth:A Moderation Analysis

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.