Innovation and economic performance in MENA region

Omar, Noha Sami Article Innovation and economic performance in MENA region Review of Economics and Political Science (REPS) Provided in Cooperation with: Cairo University, Cairo Suggested Citation: Omar, Noha Sami (2019) : Innovation and economic performance in MENA region, Review of Economics and Political Science (REPS), ISSN 2631-3561, Emerald, Bingley, Vol. 4, Iss. 2, pp. 158-175, https://doi.org/10.1108/REPS-12-2018-0042 This Version is available at: https://hdl.handle.net/10419/316003 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Innovation and economic performance in MENA region Noha Sami Omar Cairo University Faculty of Economics and Political Science, Giza, Egypt Abstract Purpose –Innovation has become the engine of economic growth, especially with the Fourth Industrial Revolution. This paper aims at studying the association between innovation –measured by gross expenditure on research and development (GERD) –and economic performance –represented by real gross domestic product (GDP) –in MENA region over the period 1996-2016. Design/methodology/approach –The paper uses the panel corrected standard error method to account for heteroskedacity and possible contemporaneous correlation across panels, and the first order autocorrelation within panel for unbalanced datasets. Findings –The study concludes that R&D expenditure is positive and statistically significant in explaining GDP, but their relationship is weak. Specifically, a 10 per cent increase in R&D expenditure raises GDP by 4 per cent. In addition, human capital, labor force and fixed capital accumulation are found positive and statistically significant. These findings highlight on the importance of innovation and education on fostering economic growth, urging MENA governments to further invest in R&D and innovation sector. Originality/value –To the best of the author’s knowledge, this paper is the first to investigate the relationship between GERD and GDP in MENA region within the endogenous-growth model framework. Keywords Innovation, MENA Paper type Research paper 1. Introduction Prosperity can increase when inputs of production are used in smarter and more efficient ways to fulfill constantly evolving human demands. Innovation represents a critical driver of productivity growth and value creation; this is even more essential in the age of the fourth Industrial Revolution. Innovation now is part of the Sustainable Development Goals (SDG9); countries are encouraged to “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”. The fuel of innovation is research and development (R&D) activities, for instance, SDG9.5 calls upon countries to increase substantially its public and private spending on R&D. OECD and East Asia have the highest R&D intensity regionally; at the country level, China and India are the centers of innovation in the world for the last decade (Schwab et al.,2017). In the past decades, Middle East and North Africa (MENA) countries have been concerned on improving and shifting their economies into knowledge-based economies. Despite undertaking several rounds of economic reforms in many of MENA countries, the region’s economic performance is below its full potential. These countries are mono-sector and vulnerable to shocks. Their economic growth has mainly been driven by oil extraction © Noha Sami Omar. Published in Review of Economics and Political Science. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode REPS 4,2 158 Received 23 December 2018 Revised 5 March 2019 Accepted 25 March 2019 Review of Economics and Political Science Vol. 4 No. 2, 2019 pp. 158-175 Emerald Publishing Limited 2631-3561 DOI 10.1108/REPS-12-2018-0042 The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/2631-3561.htm and exportation of oil exporter countries, and tourism by oil importers. In the 1970s and 1980s, the boom in oil prices has made MENA countries enjoying a high economic growth rate. The countries in this region invested heavily in ambitious development projects, education, ICT, and public health (World Bank, 2016). In the past decade, with low oil prices, MENA countries’growth deteriorated, and budget deficit increased. Hence, they started to work on diversifying their economies by shifting to knowledge-based economy. They succeeded to a great extent in improving their ICT sector, but unfortunately, it has not yet translated to a developed and matured innovation sector. Theories of economic growth look at technology and innovation as determinants of growth; technology and knowledge are not intentionally accumulated and they are created by accident as argued by Solow (1956), or endogenously and intentionally within the economic system, and explain the factors behind long-run growth as suggested by Romer (1986M,1990); and further extended by Grossman and Helpman (1991). Many empirical studies investigated the relationship between innovation and economic performance at the regional, country and firm levels. Generally, there is a kind of consensus in the literature on the positive impact of R&D and innovation on economic performance (Nadiri, 1993;Griliches, 1992,2000;Jones and Williams, 1998; Okubo et al., 2006;Mazaet al., 2013; Wang and Wu, 2015;Akoum, 2016). However, some studies doubted about the robustness of this positive relationship between R&D and economic growth (Scherer, 1999;Braunerhjelm, 2011;Pessoa, 2010;Ejermoet al., 2011; Westmore, 2013), especially in developing countries, arguing to the low level of development of these countries. The present paper studies the association between innovation –measured by gross expenditure on research and development (GERD) –and economic performance – represented by real gross domestic product (GDP) –in MENA region over the period 2000-2016. To the best of my knowledge, this paper is the first to investigate this relationship quantitatively in MENA within the endogenous-growth model framework and GERD as innovation proxy following most empirical literature. Due to R&D data deficiency in MENA, only six MENA countries –Egypt, Iran, Kuwait, Saudi Arabia, Turkey and Tunisia –are considered in the analysis and estimation. Israel and Palestine are not considered in the analysis. Israel represents an outlier in the region; globally, it had the highest R&D of 4.3 per cent of GDP like Korea, while MENA countries have very limited R&D expenditure not exceeding 1.1 per cent of GDP spent by Turkey in 2015 (WDI, 2018). Palestine has uncertain circumstances, making GERD values not much accurate and reliable. The paper uses unbalanced cross-sectional time series data that is estimated using the panel corrected standard error method using STATA 13.1. The model concludes that R&D expenditure is positive and statistically significant in explaining GDP with reasonable economic soundness. Specifically, a 10 per cent increase in R&D intensity raises GDP by 4 per cent. In addition, human capital, labor force and fixed capital accumulation are found positive significant. These findings highlight on the importance of innovation and education on fostering economic growth and urges MENA governments on further investment in these sectors. The paper is organized as follows. After introduction, Section 2 presents an overview of MENA region’s innovation and economic performance. In Section 3, a literature review provides the theoretical and empirical work related to the links between R&D, output and productivity. In Section 4 discusses the data and methodology used in estimating the relationship between R&D intensity and GDP in MENA region. Section 5 presents the results, and finally Section 6 concludes. Performance in MENA region 159 2. Overview on MENA’s economic and innovation performance In the last decades, the growth performance of MENA countries has been consistently moderate, if compared with other emerging countries. From 1993 to 2010, the average annual growth rate amounted to 4 per cent in MENA countries (WDI, 2018). These rates are comparable to Latin American that grows by 3 per cent, on average. On the contrary, MENA’s growth is still far from South Asia that grows by 6.4 per cent per annum. The positive average GDP growth rate in MENA is basically attributed to the favorable global economic trend characterized by growth in the oil market prices, the development of tourism, an increase in foreign investment and immigrant remittances, with the exception of Lebanon, Palestine and, to a lesser degree, Syria (Bosco and Mavilia, 2014). Since 2011, a period of instability and tensions has been hindering growth in MENA region. The annual growth rate of MENA countries fell to 3.1 per cent and further to 2.4 per cent when high income Gulf Cooperation Council (GCC) countries are excluded. This is because of low oil prices affecting oil exporter countries, and conflicts and revolutions affecting oil importer countries (Figure 1). After 2011, MENA growth rate decreased from 5 to 2.5 per cent in 2011 and 2015, respectively. Once stability is reached with slightly higher oil prices, and resumption of construction activities in conflict-affected countries, MENA’s growth improves but remains below its full potential. After an upsurge in growth to 4.6 per cent in 2016 driven by growth in rich-oil countries, growth fell to 1.8 per cent in 2017, because of a sharp decline in economic activity among oil exporters that are growth drivers of the region[1](Figure 1). Nevertheless, GDP per capita differs across MENA countries. Although, on average, MENA is classified as high-income region, countries are not homogenous; eight[2] countries are grouped as high, six upper-middle[3], five lower-middle[4] and two[5] low-income countries according to WB 2018 economies’classification[6]. In particular, GCC have the highest GDP per capita; namely, United Arab Emirates (UAE), Kuwait, Saudi Arabia’s GDP per capita $41K, $35K and $17K. To the contrary, Palestine and Egypt have the least per capita $2.7K, in 2016 (WDI, 2018). Many countries in the region, in the last decade, implemented reforms to increase economic diversification and mitigate their vulnerability to oil and gas prices’fluctuations. Heavy investment in digital and technological infrastructure has allowed major improvements in technological readiness, but innovation is still low in MENA and has generally fallen short of expectations. The technology readiness pillar in global Figure 1. GDP Growth, over the period 1998-2017 REPS 4,2 160 competitiveness index over the period FY08-FY18 shows an upward trend in most countries, and even most countries’rank in this pillar is higher than the innovation pillar. The growth in innovation market size also slowed down after 2015 with the decrease in oil prices. On average, MENA succeeded to improve its competitiveness performance, with the most-improved country in FY18 is Egypt. Though Turkey stepped back a little after 2003, it is the country with highest potential in innovation improvement (Schwab et al., 2017). On average, MENA’s investment in innovation is weak. Various indicators show the relative poor innovation performance in MENA to comparable economies; such as GERD, R&D intensity, patents applications, and number of scientific journal publications. This section describes the innovation literature’s widely used indicators in its analysis: GERD and R&D intensity. R&D intensity is estimated at 1 per cent in MENA in 2015, on average. This figure is above South Asia 0.6 per cent, but below all other regions, like East Asia and Europe with R&D more than 2 per cent of GDP. Similarly, at the country level, the average high-income countries R&D intensity is 2.6 per cent, while in UAE and Oman 0.87 and 0.24 per cent, respectively, in 2015. In addition, R&D intensity is approximately 0.4 per cent in Iran, which is far below the average of upper middle-income countries of 1.7 per cent. This drawback in R&D investment might be attributed to the weak industrial base in MENA, and their dependence on the service sector is the engine for prospective growth and as the oil reserves are due to be exhausted in 50 years or less (Bosco and Mavilia, 2014). The same performance is also observed using GERD indicator (Figure 2). GERD is the most indicative and widely used R&D indicator. According to UNESCO, GERD consists of the total expenditure (current and capital) on R&D by all resident companies, research institutes, university and government laboratories, etc. It excludes R&D expenditures financed by domestic firms but performed abroad. At the country level, though all countries had an increasing trend of GERD over the period 2000-2016, they differ in their investment levels. Over this period, Turkey has the highest and steepest increase in GERD reaching $11m in 2016, while Bahrain and Iraq had the lowest R&D investment. Egypt had steady moderate increments in GERD attaining $6m. The successful story of MENA is Saudi Arabia; after having negligible GERD during 2004-2009, its GERD boosts growing by 1165 per cent jumping from about PPP$0.8m (0.07 per cent of GDP) to PPP $10bn (0.9 per cent of GDP) in 2009 and 2010, respectively. Gradually, GERD in Saudi Arabia reached $12m in 2016 (all values are in PPP terms, UNESCO, 2018). On the other hand, other countries like Kuwait and Tunisia spend more or less the same amount on R&D (UNESCO, 2018; and WDI, 2018) (Figure 3). Most R&D spending is by the public sector; on Figure 2. GERD in 2015; selected countries Performance in MENA region 161 average, around 90 per cent of spending comes from the public sector in MENA region as against around one third in the European countries. Moreover, although MENA has a steady increase in patent applications and scientific and technical published research, they were below comparable regions. Patent applications reached its maximum in 2016 reaching 31 thousands that comprises only 50 per cent of Latin America’s applications (58.5 thousands). This figure is very far below East Asia that has the highest number of patents, of around 2 million applications. On the other hand, MENA performance in patent’s nationality is better; 61 per cent of patents in MENA are applied by residents, which is higher than North America (47 per cent) and Latin America (15 per cent) (Appendix 2). Similarly, the number of publications is still very low. MENA publishes around 98 thousands, which is a little above Latin America’s publications of 96.6 thousands, but far below other regions such as both North America and East Asia and Pacific of 470 thousands published articles in 2016 (Appendix 3) (WDI, 2018). The same performance is observed at the country level in MENA. The overall low R&D investment in MENA turns it to be the least region worldwide in high-technology exports. In 2016, MENA’s high-technology exports share to total manufactured exports is 4.2 per cent, compared to 12 per cent in Latin America and 16 per cent in Europe. Tunisia has the highest high-tech exports of 6 per cent, followed by Morocco with around 4 per cent. These shares are negligible in the rest MENA countries, like Algeria and Egypt that have the least exports of only 0.34 and 0.5 per cent, respectively. All these figures are much below other regions’countries; such as, Korea 27 per cent, China 25 per cent, Israel 18 per cent, and Brazil 13.5 per cent. The modest innovation performance in MENA region could be attributed to four factors: economic diversification, labor market inefficiency, poor quality of educational system, and private sector role in R&D. Concerning economic diversification, MENA countries are characterized with mono-sector services economy, either oil or tourism sectors’revenues. Oil revenues constitute around 16 per cent of GDP compared to only 1 per cent at maximum in Latin America in 2016. In addition, tourism receipts as a share of total exports is 10 per cent reaching 15 per cent excluding high-income countries, against 8 per cent in Latin America in 2016. Many studies, including Hesse (2008) and Leiderman and Maloney (2007), have established that diversified economies in the long term perform better than mono-sector economies. Recently, countries have been working on transforming their economies into more industrialization and export diversification to non-oil and tourism sectors. Consequently, oil Figure 3. GERD Evolution in MENA countries, 2000-2016 REPS 4,2 162 exporters can mitigate risks of oil price fluctuations that are for instances affected by oil drilling techniques or in battery technology for automobiles. On the other hand, non-oil exporters can ease the negative impact of factors that affect tourism revenue like internal conflicts and terrorism that hit these countries since 2011. However, there are still many things to pave the way for a real economic diversification that helps fostering and sustaining economic growth. Furthermore, MENA suffers from persistent high unemployment rate, especially among youth, low labor force participation and labor market inefficiency. In 2017, unemployment rate in MENA since 2010 reached about 10 per cent compared to 5 per cent, on average, in the world, and unemployment among youth is 27 per cent versus 13 per cent in the world. Low labor force participation confirms this picture too. Idle unemployed people leads to the loss of person’s talent, creativity and innovation. High unemployment in many countries of the region might be partly explained by the high-energy subsidies leading to economic distortions that favor industries that make intense use of capital and energy rather than labor. In addition, the labor market does not find the needed skilled and qualified labor. To meet efficiently labor market demands, education should be the focal point of MENA governments. Education is vital in improving human well-being and knowledge that can be translated into new ideas and innovation enhancing a country’s capacity to produce highervalue-added of goods and services. Although MENA ranks reasonably well in enrollment rates compared with other regions, its quality is not good. For example, scores on international tests is low, especially in math and science. In addition, education does not graduate students with qualified skills (Pissarides, 2015[7]; Achoui, 2009). There is a scarcity of local graduates in technical and vocational training programs, and especially in resource-rich countries, domestic workers are less inclined to take jobs in the private sector. This has led to high unemployment among diploma holders and to a significant brain drain. In addition, enrollment in tertiary education still lags behind, especially in technical and scientific subjects. These factors weigh heavily on the countries’capacity to sift automatically from ICT connectivity to innovation ecosystems. This urges for improving human capital, quality of education and train the labor force to meet the region’s economic needs (World Bank Group and World Economic Forum, 2016;Diaconu, 2011). Nevertheless, the public sector is the main sponsor of R&D in MENA, but governments are still called to raise public investments in innovation to boost shortterm demand and raise long-term growth potential. In addition, in parallel, governments should work on raising its competitiveness in attracting entrepreneurs and the private sector to invest in innovation by reforming and solving the problems of labor market and education to guarantee the sustainability of progress accumulated in previous years. In addition, according to the World Bank Group and World Economic Forum (2016), for instance, executives of oil importers show their concern about longterm unemployment or underemployment (56 per cent of Jordanian businesses), profound social instability (40 per cent of Tunisian businesses), and failure of national governance (38 per cent of Algerian businesses). The improvement in these factors and innovation increases MENA’s competitiveness with higher productivity and sustained growth (Goedhuys et al., 2011). The private sector engagement in innovation sector in MENA countries is essential to close the technological gap with other developed and emerging countries (Oukil, 2011). Although some MENA countries achieved some improvements in these aspects, these factors still hinder innovation and technological progress that hamper sustainable economic growth and MENA capacity to join effectively the Fourth Industrial Revolution. Performance in MENA region 163 3. Literature review Long ago, the importance of technology and innovation for economic growth has been established. Schumpeter (1912,1939) argued that economic growth represents a slowly and progressive change of the economic system, resulting from exogenous factors of the economic system that is innovation. His economic growth model suggests that innovation leads to competition, and with education economic growth is ensured. This idea has been more formalized by Solow’s exogenous growth model (1956). Solow assumed that technology is exogenous and knowledge accumulation is left unspecified and determined outside the model. Consequently, there are no externalities to knowledge accumulation; each (homogeneous) worker reaps the benefits of exogenous technical progress in proportion to their contribution to output. Later, Romer (1986,1990) and Grossman and Helpman (1991) extended the Solow theory to a new economic growth theory that emphasized that productivity growth results from intentional innovation by rational, private sector profit-maximizing agents and is therefore endogenously determined (see also, Lucas, 1988). The innovation-based models of endogenous growth model examined the long run growth that is considered endogenously determined by technical change resulting from the private sector’s R&D. In addition, they considered that R&D activities generate knowledge that prevents capital’s decreasing returns to scale as a factor of production. Generally, there is a kind of consensus in the empirical literature on the positive impact of R&D and innovation on economic performance (Nadiri, 1993;Griliches, 1992,2000;Jones and Williams, 1998;Okubo et al., 2006;Wang and Wu, 2015;Akoum, 2016). However, some studies doubted about the robustness of this positive relationship between R&D and economic growth (Scherer, 1999;Braunerhjelm, 2011;Pessoa, 2010; Ejermo et al., 2011; Westmore, 2013), especially in developing countries, arguing to the low level of development of these countries. Most studies adopted the endogenous growth model framework in studying this relationship. This relationship is tested at different levels; firm, industry, country and regional levels. The present study follows the more recent vein of regional studies on MENA region. At the country level, Blanco et al. (2016) concluded that, during the period 1963-2007, private sector’s R&D has a large positive effect on both output and productivity at the state level in the US in the long run, using dynamic ordinary least squares and pooled mean group methods. Authors pointed that the levels of human capital and economic development are very important to R&D investment (see also, Pece et al.,2015-Checz Republic, Poland and Hungary-; and Bronzini and Piselli, 2006-Italy). This bells the ring to MENA governments on the urgency of improving their human capital through educational system quality improvement. In addition, Peng (2010) concluded a highly positive and strong relationship between R&D expenditures and economic growth in China. In Turkey, various papers found a positive significant relationship but weak between R&D and economic growth (Ustabas and Ömer Ersin, 2016; Bozkurt, 2015, Taban and Sengür, 2013; Altın and Kaya, 2009). Bektaset al. (2015) concluded the absence of long relationship between R&D and economic growth over the period 1990-2013, using cointegration and Granger causality tests. Authors attributed this to the fact that despite Turkey’s effort in R&D investment, it is still a developing country. At the regional level, Turedi (2016) found a two-way positive causality between R&D expenditures and economic growth, and a one-way positive causality from patent applications to economic growth on OECD countries for the period 1996-2011, using the GMM (Generalized Method of Moments) approach (Chatterjee et al., 2017;Gulmez and Yardimcioglu, 2012;Saraç, 2009;Yanyun and Mingqian, 2004; Sylwester, 2001; Freire-Seren, REPS 4,2 164 1999). Simsek ve Behdio glu (2006) suggested that Turkey lags behind OECD countries with regard to R&D investment though R&D has a positive impact on economic growth, adopting cluster analysis for the period 1999-2002. Later, Göçer (2013) reached the same conclusion. The author concluded a weaker positive association between R&D expenditure and economic growth in developing than developed countries, over the period 1996-2012. Alerasoul and Samimi (2009) reached no significance relationship between R&D and economic growth for 30 developing countries –Argentina, Armenia, Iran, Mexico, Tukey and Tunisia –for the period 2000-2006. The strength of R&D and economic growth relationship might be attributed to the different R&D resources that countries invest. On MENA region, recently, Azimi et al. (2018) suggested a positive significant relationship between economic growth and innovation during the period 2010-2015, using the GMM approach. This conclusion is not very much relevant to indicators used in the analysis. Authors used the GII indicator of human capital that includes education and research, which are not similar to innovation. Using dynamic panel data techniques, Utku_ Ismihan (2017) also recommended a positive R&D impact on economic growth during the period 1980-2014. Despite its effort in constructing its R&D index, the paper ignored an important and more relevant indictor that is the R&D investment besides using patents and trademark indicators. The present paper overcomes these two papers innovation’s misconception by using the R&D expenditure to measure MENA countries’innovation performance, as widely used in literature. In addition, some papers assumed that R&D and economic growth relationship might differ with respect to the degree of countries’development. Celikay and Gumus (2015),on52 developed and developing countries over the period 1996-2010, used a dynamic panel data model and found that R&D expenditure has a positive significant effect on economic growth for all countries in the long run, but the effect is weak in the short run for developing countries. Similarly, on 20 OECD developed and 10 Non-OECD emerging economies, Ulker (2004), over the period 1981-1997, found a positive significant relationship between per capita GDP and innovation only for OECD with large markets. However, in contrary to the endogenous-growth model, OECD data did not support the constant returns to innovation, implying that innovation does not lead to permanent increases in economic growth (Frantzen, 2000). This shows that the degree of development of a country makes a difference by speeding up economic growth from R&D investment (Petrariu et al.,2013;Gittleman and Wolff, 1995;Goel and Ram, 1994). Furthermore, there are controversial conclusions about the impact of source of R&D expenditure, on economic growth. Lichtenberg (1992), using data for the period 1964-1989 from 74 countries, found that although there is a positive effect of R&D expenditure on growth, private sector R&D expenditures are more efficient and effective compared to public sector expenditures. Similarly, a recent paper by Wang and Wu (2015), they found in China, at the provincial level over the period 1997-2013, a strong and positive correlation between enterprise R&D and economic growth, while nearly zero correlation between government R&D expenditure and economic growth. Authors attributed this finding to government R&D expenditure that is more directed toward basic research, which does not directly promote economic growth. To the contrary, Van Pottelsbergh and Guellec (2004), examining 16 OECD countries over the period 1980-1998, concluded no difference on the positive significant effect of R&D expenditure on economic growth between public and private sectors. 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(2013), “R&D, patenting and growth: the role of public policy”, OECD Economics Department Working Papers, No. 1047, OECD Publishing, Paris, available at: https://doi.org/ 10.1787/5k46h2rfb4f3-en World Bank (2016), Doing Business Regional Profile 2016: Middle East and North Africa (MENA) (English), Washington, DC, World Bank Group, available at: http://documents.worldbank.org/ curated/en/451111468196749818/Doing-business-regional-profile-2016-Middle-East-and-NorthAfrica-MENA World Bank (2018), “World development indicators”, available at: https://data.worldbank.org/datacatalog/world-development-indicators World Bank Group and World Economic Forum (2016), The Arab World Competitiveness Report. Yanyun, Z. and Mingqian, Z. (2004), “R&D and economic growth-panel data analysis in ASEAN þ“3 Countries”,Seoul Conference 2004, Korea and the World Economy III. Further reading Bayoumi, T., Coe, D.T. and Helpman, E. (1999), “R&D spillovers and global growth”,Journal of International Economics, Vol. 47, pp. 399-428. Cvetanovi c, S. Mladenovi c, I. and Sokolov-Mladenovi c, S. (2016), “R&D expenditure and economic growth: EU28 evidence for the period 2002–2012”,doi:10.1080/1331677X.2016.1211948, available at: https://doi.org/10.1080/1331677X.2016.1211948 Falk, M. (2007), “R&D spending in the high-tech sector and economic growth”,Research in Economics, Vol. 61, pp. 140-147. Kim, L.W. (2011), “The economic growth effect of R&D activity in korea”,Korea and the World Economy, Vol. 12 No. 1, pp. 25-44. Sabry, M.I. (2018), “State business relations and innovation in the MENA region”,Middle East Development Journal, Vol. 10 No. 2, pp. 195-224. Sadraoui, T., Ali, T.B. and Deguachi, B. (2014), “Economic growth and international R&D cooperation: a panel granger causality analysis”,International Journal of Econometrics and Financial Management, Vol. 2 No. 1, pp. 7-21. Performance in MENA region 173 Appendix 1 Appendix 2 Figure A1. Real GDP and Real R&D Expenditure in Selected MENA countries, 2000-2016 24 25 26 27 28 Real GDP 23 24 25 26 27 28 Real R&D Expenditure Source: Done by author, data from World Bank (2018) Figure A2. Patent applications, 2015; selected countries REPS 4,2 174 Appendix 3 Corresponding author Noha Sami Omar can be contacted at: [email protected] For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected] Figure A3. Scientific and Technical Journal Articles across Regions, 2016 Performance in MENA region 175