The Evaluation of Impacts of Knowledge-Based Economy Factors on the Improvement of Total Factor Productivity (a Comparative Study of Emerging and G7 Economies)

This essay evaluates the impacts of knowledge-based economy factors on the total factor productivity (TFP) of emerging economies (the countries known as emerging economies are Brazil, Russia, India, China, South Korea, South Africa, and Singapore) and compares them with G7 economies using panel data analysis during 1996-2013. The results indicate that the ratio of ICT capital stock to GDP and the ratio of foreign R&D capital stock to GDP have the greatest positive impact on TFP, respectively, in emerging economies. But the ratio of domestic R&D capital stock to GDP and the ratio of education costs to GDP in emerging economies comparing to the developed countries of G7 have a less influential impact on TFP. However, in these countries, we see the positive effect of foreign R&D stock through the acquisition of commercial partners' technologies via imports and customizing them according to local needs and using this factor beside domestic R&D activities which provides a proper atmosphere for improvement of TFP and approaching a knowledge-based economy.