Research & Development: The Crucial Enabler of Economic Growth

Abstract

Research and Development (R&D) is widely regarded as a critical investment contributing to expansion of knowledge base and identifying the most efficient methods of production within an economy. It not only facilitates technological advancement but also strengthens a country’s ability to adapt to changing global conditions and sustain long-term economic growth. Numerous empirical studies across both developed and developing economies have consistently demonstrated a strong and positive correlation between R&D expenditure and economic growth.   Many countries have therefore prioritized R&D in their science and technology policies, adopting targets based on R&D intensity measured as Gross Expenditure on Research and Development (GERD) as a percentage of GDP to strengthen their innovation capacities and global competitiveness. For an emerging economy like India, transitioning from a net consumer to a net producer of knowledge is essential to maintain growth momentum and reduce dependence on external technologies. This requires enhanced public and private investment in R&D, stronger industry academia linkages, and supportive policy frameworks to stimulate indigenous innovation. This paper examines the relationship between R&D and economic growth and recent trends in India’s R&D expenditure and underscores the need for sustained investment to secure long-term economic resilience and technological leadership.