Abstract:

This study aims to examine the effects of research and development expenditure on economic growth and carbon dioxide emission in the panel data for the period of 1996-2011 from 5 nations (Germany, Russian Federation, United Kingdom, United States and Canada). The panel co-integration was conducted and the results show that there is co-integrated relationship among the variables (R&D, GDP, Energy Use and Carbon Dioxide Emission). Then the FMOLS test was performed and the findings explain that energy use and R&D are the determinants of GDP. Results from FMOLS show that energy use and R&D are the determinants of GDP. Energy use and GDP are the determinants of carbon dioxide emission. Results from DOLS show that R&D is important to boost economic growth while energy use, GDP and R&D can have deleterious effects on carbon dioxide emission. Therefore, it is important to control the R&D expenditure to balance economic growth and environmental conservation.

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