Abstract:

In the global competitive environment, where international borders have been abolished and multilateral liberalization process and economic cycles are experienced, also a number of changes have occurred in determinants of growth. The theories, called Solow-Swan growth or Neo-classical growth model, which is put forth with Solow (1956) and Swan's (1956) studies, states that production function has decreasing returns to scale and exogenous technology. But in contrast to Neo-classical growth theory, Endogenous growth theories suggest that production function has increasing returns to scale and endogenous technology. By reason of important contributions to endogenous growth literature by Romer (1990), Grossman and Helpman (1991), and Aghion and Howitt (1992) , Research & Development (R&D) is taken place in models of endogenous growth theories. This paper investigates relations between R&D and economic growth for 34 countries. Applying the panel causality method with annual data from 1997 to 2008 reveals that there is a unidirectional causal relationship running from R&D to Economic growth.

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