The impact of R&D expenditures on high-tech product exports

The mercantilist period, experienced since the 15th century, has been the scene of a capital accumulation race between western countries. In this process, which can also be expressed as trade capitalism, it has been accepted that wealth passes through the possession of precious metals, policies have been applied to increase exports and reduce imports. The industrial revolution that began in England with the influence of technological developments from the mid-18th century – industrial capitalism – brought about mass production and created high-level increases in the supply of manufactured goods. As in the mercantilist period, increasing exports was critical to meltdown this resulting supply surplus and prosperity. A significant level of development difference has emerged between the countries that have managed to achieve industrialization and those that have not. Countries have begun to be categorized as developed and underdeveloped countries according to the level of industrialization. Currently, developed countries are trying to achieve high economic growth rates to gain the upper hand over each other by increasing their wealth, while underdeveloped countries are trying to reach the level of developed countries. As in previous periods, export is considered the most effective tool that can be used for this purpose. Especially since the 1980s, countries have been pursuing export-based policies for sustainable growth goals.

This paper is organized as follows. Conceptual explanations are made about the issue in the next part of the study, and the theoretical literature is summarized. In the second part, the empirical literature is presented, and in the third part, a data set and an econometric method are introduced. In the fourth section, the results of the empirical analysis are reported, and in the conclusion section, the study is concluded with a general evaluation and policy recommendations. Thanks to the econometric method applied, more detailed information has been obtained about the relationship between the variables compared to other studies on this subject.

Conceptual and theoretical framework

According to the definition made by (Davis, 1982), a high-tech product is produced with a high R&D expenditure. It is also expressed as technology-intensive goods with high-income elasticity and complex production stages, which have a significant impact on the growth of a country’s economy. Therefore, high-tech production refers to the provision of efficiency and quality improvement in production. Nowadays, when export-based growth policies are implemented, fast-growing countries are trying to increase the exports of high-tech products to protect and expand their share in export markets (Mani, 2000; Q olako g lu, 2021; Sara, 2012).

(Harris, Moffat, 2011). As a general rule, the effects of R&D activities on exports are expressed in two different ways as input and output. In the input approach, the relationship between exports and factors such as R&D expenditures and research and development personnel used in the development of a new product or production technique is examined. In the output approach, the relationship between patents obtained as a result of R&D activities and exports is examined (Y i ld i r i m, Kesiko g lu, 2012).

The products of the manufacturing industry of a country are classified by the OECD into four groups according to the level of technology. Accordingly, technology density is taken into account both the level of technology-specific to the sector (ratio of R&D expenditures to value-added) and R&D expenditures on intermediate and capital goods, as well as technology distinguished as low, medium-low, medium-high, and high. In this context, high-tech products include products with high R&D intensity, such as products produced in the computer, aerospace, pharmaceuticals, chemicals, electrical machinery, electronics, and telecommunications industries or produced through scientific research (Hatzichronoglou, 1997; OECD, 2011). In the light of these explanations, it can be stated that the way to high technology in production and therefore in exports passes through R&D activities. For this reason, it can be said that the countries that allocate more share to R&D expenditures are in a better position in terms of high-tech product exports. This situation is shown in Table 1.