Research and Development as a Moderating Variable for Sustainable Economic Performance: The Asian, European, and Kuwaiti Models

Abstract

The research and development (R&D) expenditure in Kuwait is insufficient to lead to innovation and a knowledge economy. Investment in R&D has been shown to sustain elevated economic performance. The objective of this study is to explore the association between three competing dimensions of R&D indicators that lead to sustainable economic performance within any given country, namely, R&D expenditure, the number of researchers, and the number of patent rights, using time-series data collected over a 20-year period (1996–2016) by the World Bank Group. R&D indicators were compared between high- and middle-income countries including models from Asian (South Korea, Singapore, and Malaysia) and European (Finland and Ireland) countries as well as the State of Kuwait. Moreover, a case study describing R&D investments in Kuwait is presented. Overall, the results reveal higher R&D spending, number of researchers, and gross domestic product (GDP) per capita for the Asian and European models. Current R&D expenditure in Kuwait is estimated at 0.08% of GDP (2016), which is significantly lower than the mean of the middle-income countries (1.58%). Furthermore, the number of researchers (per million) in Kuwait (386) is less than half of the mean number of researchers in middle-income countries (775) (2015). Low R&D investments in the State of Kuwait has gradually led to a decreased GDP per capita. Regression analysis shows that GDP per capita can be predicted solely based on the number of researchers (beta = 0.780, R2 = 0.608). The number of researchers is the most crucial variable to predict GDP per capita, and the R&D expenditure is a good indicator of the number of researchers. These findings offer invaluable insight into the sustainable development goals (SDG 9). To our knowledge, this paper presents the first application of the effect of R&D on sustainable economic performance with reference to the SDG target 9.5 “Research & Development”. Thus, in order to enhance scientific research (both academic, professional, and industrial), countries need to increase the number of researchers, and these actions are necessary to introduce sustainable growth to GDP.