Abstract:

The concept of the "mediate income trap" describes countries that have failed to sustainable economic growth and have been very long stuck at the level of national income per person. This study focused on selected OECD countries; R&D spending, domestic savings rates and the impact of high-tech product exports on economic growth. These variables have been analyzed using the dynamic CCEGM model. The panel data, based on the data of the OECD countries 1995-2015, has achieved positive intervariable results according to the expectation. Furthermore, the conclusion was that the variable R&D expenditure which has the highest impact on the growth performance of the 20 countries, while the highest impact variable when assessed in Turkey is domestic savings. In this context, investments to increase R&D spending in countries with a medium income such as Turkey should be focused on policies aimed at increasing domestic savings, based on the fact that the high added value in the long term will increase the production and export of goods and services.

Abstract:

The middle income trap describes countries that have not been able to accomplish sustainable economic growth and have been stuck in the level of income per capita for many years. In this study, countries located in OECD have been analyzed by using savings rate, R&D expenditures and high technology export data and investigated effect on sustainable economic growth. The variables have been analysed by applying  dynamic CCEGM model. Positive results have been obtained as expected. In addition, while variable of R&D expenditures have  highest impact on the growth performance of 20 countries, variable of domestic savings have highest impact on the growth performance of middle income countries such as Turkey. In this context, since investments to increase R & D expenditures will affect growth in the long run, middle income countries should be produce priority policies aimed at increasing domestic savings.

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