Investigating techonomy: the multilevel effect of R&D investment on economic performance

Abstract We live in an era where research and development (R&D) innovation shapes the future of humanity. However, mixed results regarding the return on investment in R&D, as measured by national-level indicators, often leave policymakers uncertain about the long-term benefits of such investments. Ideally, R&D investments should yield returns by influencing key economic indicators. This study explores the multilevel effects of R&D investment on national economic performance, focusing on its secondary impacts on stock market valuation, industry value added, and patent activity, with attention to country characteristics such as technological advancement. In general, R&D investment is positively associated with GDP. For technologically advanced countries, value added from R&D innovation, especially when reflected in increased industry value, is the primary driver of GDP growth. In contrast, for developing countries, R&D investment has significant yet conditional economic effects, with human development playing a key role in driving growth.