Effect of direct and indirect spillovers of foreign research and development on Competitiveness and growth: Application of PANEL ARDL model

According to theories of international economics, trade between countries causes the flow and transfer of knowledge and technology between trading partners. This transition is referred to in the international economic literature as foreign research and development spillovers. These spillovers occur in two direct and indirect ways. Indirect spillovers are caused by indirect trade and through another country between countries. Therefore, the purpose of this study is to investigate the effects of direct and indirect spillovers of foreign research and development on the Gross Domestic Product and also on competitiveness in Iran and its major trading partners during 2010-2019 using the autoregressive distributed lag model in panel data. For this purpose, first two indicators of direct spillovers and indirect spillovers for the studied countries were calculated. Then, the effect of these two factors was examined on the GDP and also competitiveness. The results of model showed that in the long run, both direct and indirect spillover effects of foreign R&D had a positive and significant effect on economic growth. Also, domestic research and development expenditures have had a positive and significant effect on the economic growth of countries in the long run. Other results of the study have shown that both direct and indirect spillovers have had a positive and significant effect on the competitiveness index of countries in the long run. According to the results, it can be said that the amount of domestic research and development should be increased to increase both economic growth and the country's competitiveness index.