Modelling the economic cycle between GDP and government spending on technological innovation

• Main Authors: Phoong, S.Y., Phoong, S.W.
• Format: Article
• Published: Universiti Putra Malaysia 2017
• Subjects: Business; QA Mathematics
• Online Access: http://eprints.um.edu.my/18943/; http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2025%20(S)%20Nov.%202017/04%20JSSH(S)-0590-2017-4thProof.pdf

Gross Domestic Product (GDP) is a key indicator of a country’s economic growth and its well-being. Technological innovation on the other hand is an important driver of growth for productivity and revenue. This paper examines the relationship between GDP per capita and government spending on technology innovation in Malaysia. on in Malaysia. It employs Augmented Dickey-Fuller (ADF) test, Vector Autoregression (VAR) model and variance decomposition to measure the estimation models. The results point to a strong positive relationship between GDP per capita and the expenditure on technology innovation. Furthermore, GDP has a large impact on Malaysia’s government spending on technology innovation.