Co-integration and Causality between RD Expenditure and Economic Growth in China: 1953―2004

摘要

This paper investigates the co-integration and causal relationship between R&D expenditure and economic growth and examines the causality pattern in the R&D expenditure and economic growth in China. The analysis employs Augmented Dickey Fuller (ADF) test,Johansson co-integration approach,Error correction model (ECM),Granger causality test together with the impulse response function analysis using R&D expenditure and GDP data for China from 1953 to 2004.The results suggest that there is a long-run co-integration relationship between the R&D and GDP,and a bidirectional causal relationship running from R&D to GDP and vice versa in the long-run also exists.It implies that the increasing of R&D expenditure may lead to sustain economic growth. It also implies a R&D intensive planning policy may be feasible to promote Chinese economic growth in the long run and a sustainable development strategy may be feasible with higher level of R&D investment.