The different effects of basic research in enterprises on economic growth: Income-level quantile analysis

In the open innovation era, enterprises should conduct more of their own basic research or not rely on contextual factors. We use quantile regression to determine that basic research in the business sector has different effects on economic performance by national income level using thirty-one Organization for Economic Co-operation and Development (OECD) and non-OECD countries including China during 1996-2014. We find that basic research expenditure has a negative relationship with economic growth in low-income countries, whereas in high-income countries, the relationship is positive. Furthermore, the greater the national income, the higher the importance of basic research for economic growth. However, increased absorptive capacity mediates the positive relationship between basic research investment and economic growth in high-income countries, and, in low-income countries, it mediates the negative relationship between the two. In this study, we provide a more detailed understanding of the relationships between basic research investment in the business sector and economic growth.