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

Authors: Tshepo Sekaiwa; Andrew Maredza

Addresses: School of Economic and Decision Sciences, North West University, P.O. Box 393, Ganyesa 8613, South Africa ' Economics Department, North-West University, University Drive & Albert Luthuli, Mmabatho, South Africa

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.

Keywords: total factor productivity; TFP; research and development; R&D; Schumpeterian growth theory; South Africa; autoregressive distributed lag; ARDL.

DOI: 10.1504/GBER.2018.092764

Global Business and Economics Review, 2018 Vol.20 No.4, pp.453 - 484

Received: 27 May 2016
Accepted: 02 Mar 2017
Published online: 29 Jun 2018 *

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