international business

Topics: Economic growth, Human Development Index, United Nations Development Programme Pages: 15 (4438 words) Published: July 29, 2014



Eastern Washington University, Department of Management, 668 N. Riverpoint Blvd., Suite A Spokane, WA 99292, USA


Eastern Washington University, Department of Management, 668 N. Riverpoint Blvd., Suite A Spokane, WA 99292, USA


Eastern Washington University, Department of Management, 668 N. Riverpoint Blvd., Suite A Spokane, WA 99292, USA


Eastern Washington University, Department of Management, 668 N. Riverpoint Blvd., Suite A Spokane, WA 99292, USA


Many believe that a country cannot go wrong with investing in R&D. It has been said that innovation is a key driver for economic growth in both developed and developing countries. This research aimed to understand the relationship between R&D spending, innovation, and economic development within the different stages of economic development. Many relationships are looked at within stages of development. This research is an extension of Kawahara, Light, Lu, Ristori, and Steenhuis (2013) work on R&D and economic development. The research shows that countries in different stages of development are affected by R&D spending and innovation differently.

Keywords: R&D, innovation, economic development


Continuous change in today’s modern world leaves companies, and ultimately countries, facing the challenge of responding to trends and competition. Taking effective measures in order to sustain long-run growth and development is just one example of a response to the change. The continual rapid pace of innovation and increases in productivity has continued for most of the century. Knowing this, it is important to recognize that innovation has a wide range of activities and measures (Greenstone and Looney, 2011). The Global Innovation Index Report defines innovation generally as “the implementation of a new or significantly improved product (that is, a physical good or service), process, a new marketing method, or a new organizational method in business practices, workplace organization, or external relations” (Dutta and Lanvin 2013). Which leads to the definition of competitiveness by Schwab and Sala-i-Martin’s (2013) as the set of institutions, policies and factors that determine a country’s level of productivity. Dutta and Lanvin (2013) state that innovation is a driving force for country competitiveness. However, much research does not discuss innovation in accordance to a country’s specific stage of development. According to Schwab and Sala-i-Martin (2013) economies are grouped in three stages of development: the factor-driven stage, the efficiency-driven stage and the innovation-driven stage.

R&D can be related to measures of economic processes. R&D can also be related to innovation indicators through some type of knowledge production function (Mairesse and Mohnen, 2004). According to the UNESCO (2010) report on Measuring R&D, R&D is most heavily concentrated in the United States, the European Union, and Japan. In the developing countries, R&D expenditure and output are concentrated in a relatively small group of countries in each region. The same report illustrates that developing countries differ in “production and dissemination of, and access to information, subsumed in the term culture of information” (UNESCO, 2010). Most research to date has related R&D to measures of economic performance while the relationship between R&D, innovation, and stages of economic development remains less explored. These different processes show why it is necessary to have a complete understanding of how and where innovation can enhance value in knowledge-intensive processes. This research looks to be an extension of research previously conducted by (Kawahara, Light, Lu, Ristori, and Steenhuis,...

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