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Macroeconomic factors, R&D expenditure and research productivity in economics and finance

Ali Uyar (CERIIM, Excelia Business School, La Rochelle, France)
Cemil Kuzey (Arthur J Bauernfeind College of Business, Murray State University,Murray, Kentucky, USA)
Merve Kilic Karamahmutoglu (Department of International Trade and Business, Samsun University,Samsun, Turkey)

Managerial Finance

ISSN: 0307-4358

Article publication date: 22 February 2022

Issue publication date: 22 April 2022

323

Abstract

Purpose

Drawing on institutional theory and knowledge spillover, the study aims to examine whether there is a causality relationship between macroeconomic factors and research productivity.

Design/methodology/approach

The study uses fixed-effects (FE) panel regression analysis, utilizing 1,614 country–year observations and 541,732 citable publications between 1996 and 2017, to explore the relationship between macroeconomic factors, research and development (R&D) expenditure and research productivity in economics and finance.

Findings

The results highlight a two-way relationship between R&D expenditure and economic development and research productivity. However, research productivity has no relationship with foreign direct investment (FDI), trade and financial development. In terms of remaining macroeconomic factors, financial development, trade and FDI have insignificant associations with research productivity in both directions of causality. In line with institutional theory, the findings support the notion that economically more developed countries and countries dedicating greater R&D funds have more potential to support research activities. On the other hand, in line with knowledge spillover, the research output of nations contributes to the economic development and expansion of R&D budgets. The results are robust to alternative methodology, endogeneity concerns, additional control variables, alternative sampling and alternative research productivity proxy.

Research limitations/implications

The study suggests practical implications for nations to formulate macro-policies and a better research environment for academicians and to establish links between academic research and macroeconomic factors.

Originality/value

First, as there is limited research focusing on the bidirectional causality between the macroeconomic environment and academic research activity, the study adds to the understanding of the causality relationship between these two constructs. Second, it examines the bidirectional relationship between macroeconomic factors and research output at a global scale, while prior studies mostly focus on a single country, or a certain region or continent. Further, it is one of the few attempts particularly focusing on economics and finance research's bidirectional relation with the macroeconomic environment.

Keywords

Citation

Uyar, A., Kuzey, C. and Kilic Karamahmutoglu, M. (2022), "Macroeconomic factors, R&D expenditure and research productivity in economics and finance", Managerial Finance, Vol. 48 No. 5, pp. 733-759. https://doi.org/10.1108/MF-12-2021-0602

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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