R&D, Innovation and Output: Evidence from OECD and Non-OECD Countries

In this paper we examine the predictions of the non-scale endogenous growth theories that an increase in the share of researchers in labour leads to an increase in innovation and innovation raises per capita output. Using panel data from 41 OECD and non-OECD countries, we show that an increase in the share of researchers in labour increases innovation only in the large market OECD countries. In addition, innovation raises per labour GDP in the high income OECD countries only, while raising it in all non-OECD countries, except for the low income countries. These results provide strong support for the non-scale endogenous growth theories