Causal relationship between ICT R&D investment and economic growth in Korea

- ICT R&D investment is driven by economic growth and vice versa.
- Private R&D investment has stronger attribute of leading economic growth than public R&D investment.
- Private R&D has stronger attribute of induced investment by economic growth than public R&D investment.
- Bidirectional causality between public and private sector indicates a virtuous cycle has taken hold.

This study examined the Granger-causality between R&D investment and economic growth for Korea's ICT industry. Bidirectional Granger-causality was observed between ICT R&D investment and economic growth, and this result implies that ICT R&D investment is driven by economic growth and vice versa. When ICT R&D investment was classified into public sector and private sector, the results showed the private ICT R&D investment had stronger relationship with economic growth compared to public the ICT R&D investment. It means the private ICT R&D investment has stronger attribute of leading economic growth and induced investment by economic growth than the Public ICT R&D investment. The results also reported bidirectional causality between public ICT R&D investment and private ICT R&D investment. The establishment of two-way Granger-causality between public sector and private sector indicates a virtuous cycle has taken hold.