Government R&D impact on the South African macro-economy

This paper analyses the impact of government R&D on the macro-economy of South Africa. The empirical estimates of the impact of R&D are based on the backward and forward linkages of a macro-economy, within a national innovation system (NIS). There are structural implications of the study, namely how R&D investments can result in the creation of new industries, job creation and improved national productivity. The largest indirect impact of R&D expenditure by public institutions and agencies is on community services, financial and businesses and manufacturing, in terms of employment and contribution to the country's GDP. Community services are impacted through the backward linkages derived from the expenditure by various research institutions on intermediate inputs such as water, electricity and health. Describing and quantifying the linkages between research, development and innovation and economic impacts provides a basis for a greater understanding of the value the economy and its sectors derive from R&D. The results of the analysis indicates that the real economic significance of R&D lies not in spending, but in the results achieved and is measured in terms of contribution to innovation as a key determinant of economic and social wellbeing, productivity, and growth and development.

Keywords: research and development (R&D), innovation, knowledge economy indicators, input-output model, impact assessment

JEL Classification: R15, O38, O11