The Significance of Research and Development for Economic Growth: The Case of Pakistan

This paper concentrates on the significance of Research and Development (R&D) for economic growth in the developing economy of Pakistan. The paper also questioned the major macro determinants of R&D in Pakistan. The study used time series data for the period 1971- 2008. The results obtained from the Ordinary Squares method showed that R&D significantly affects the Real GDP per capita in Pakistan. Health, labour force , and Physical capital are among the other determinants of Real GDP per capita. The results further show that real GDP per capita and quality of educational institutions are the significant factors which affect R&D. The Johansen Cointegration test confirmed the existence of long run relationship between R&D and economic growth. Similarly, R&D and its determinants were also found in long run relationship.It is therefore recommended to increase investment in R&D to achieve sustained economic growth. It is also recommended to collect and record quality R&D data for effective policy making in the field of science and technology, and social sectors in Pakistan.