The Interplay Between Governance and R&D Investment in Driving Asia’s Economic Growth: An Empirical Inquest

While a number of studies have analyzed the determinants of economic growth in Asia, the research on the synergistic interplay of the quality of governance and the investments in research and development have not received nuanced attention in the scholarly research. This study fills the research gap by looking at the joint effect of governance and R&D investment on economic growth in Asian nations with varying levels of development. Using the fixed-effects model and the generalized method of moments (GMM) model, this study investigated the individual and combined effect of governance and R&D investment in driving economic growth in the static as well as dynamic panel of 34 Asian nations for the period 2000–2024. The study further undertakes a comparative assessment of the lower-middle-income, upper-middle-income, and high-income economies on the continent. The findings reveal that the interaction between R&D and governance is negative and significant in lower-middle-income countries such as India, Indonesia, Philippines, and Tajikistan, showing that weak institutions hinder R&D effectiveness. It turns strongly positive in upper-middle-income economies such as China, Kazakhstan, Malaysia, and Thailand, as governance strengthens, but becomes insignificant, in high-income nations such as Israel, Korea, Singapore, and Qatar, suggesting diminishing returns. The results under dynamic panel estimation show positive and significant effects of the interaction between R&D and governance upon per capita GDP in all countries’ panels. The findings suggest that the diverse and nonlinear progression from technological adoption to creation in Asian nations requires sustained investments in R&D and deliberate policy alignment with national innovation systems.