The Effect of Research and Development, Final Consumption Expenditure, and Governance Indicators on Economic Growth in High-Income Countries: A Panel Data Analysis

Authors

  • Ana Amelia Janah University Of Lampung
  • Angelica Amelia Valenty University Of Lampung
  • Cintya Dinda Naura University Of Lampung
  • Putra Andagayaksa University Of Lampung
  • Salsa Pebiola University Of Lampung
  • Sherli Natasya University of Lampung

Keywords:

Economic Growth, Research And Development, Final Consumption Expenditure, Governance Indicators, Panel Data Analysis

Abstract

This study examines the effect of Research and Development (R&D), Final Consumption Expenditure (FCE), and governance indicators on economic growth in 25 high-income countries over the period 2000–2024 using a panel data approach. Economic growth is influenced not only by capital accumulation and market activity, but also by innovation, domestic demand, and institutional quality. This study employs the Random Effects Model (REM) with robust standard errors to address heteroskedasticity and autocorrelation in the panel data. Governance indicators, comprising Voice and Accountability, Political Stability, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption, are incorporated as moderating variables in the interaction terms with R&D and FCE. The empirical results show that R&D has a negative and statistically significant effect on economic growth, suggesting that the benefits of R&D investment in high-income countries may require time to materialize and depend on supporting institutional conditions. Final Consumption Expenditure has a positive effect on economic growth, consistent with the Keynesian view that domestic demand stimulates output, although the result is weakly significant at the 10 percent level. Regarding the moderating role of governance, Voice and Accountability significantly weakens the effect of R&D on growth, while Regulatory Quality shows a weakly positive moderating effect on R&D. On the consumption side, Political Stability and Control of Corruption negatively moderate the relationship between FCE and growth, while Rule of Law significantly strengthens it. Overall, the findings indicate that the relationship between innovation, consumption, and economic growth in high-income countries is shaped by the quality of specific governance dimensions, highlighting the importance of institutional context in determining the effectiveness of economic policies.

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Published

2026-06-17

How to Cite

Janah, A. A., Valenty, A. A. ., Naura, C. D. ., Andagayaksa, P. ., Pebiola, S. ., & Natasya, S. . (2026). The Effect of Research and Development, Final Consumption Expenditure, and Governance Indicators on Economic Growth in High-Income Countries: A Panel Data Analysis. DAS CONFERENCE INTERNATIONAL SERIES, 4, 320–326. Retrieved from https://journal.das-institute.com/index.php/proceeding/article/view/1437

Issue

Vol. 4 (2026): Proceeding International Conference on Global Economic Dynamics

Section

Articles Proceeding

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Copyright (c) 2026 Ana Amelia Janah, Angelica Amelia Valenty, Cintya Dinda Naura, Putra Andagayaksa, Salsa Pebiola, Sherli Natasya

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