THE EFFECTS OF RESEARCH DEVELOPMENT AND INNOVATION INVESTMENTS ON FINANCIAL DEVELOPMENT: BRICS-TM COUNTRIES EXAMPLE

In this study, the effect of R & D and innovation on financial development for BRICS-TM countries (Brazil, Russia, India, China, South Africa, Turkey and Mexico) was tested econometrically using yearly data for the period 2000-2015. For this purpose, firstly, the horizontal cross-section dependencies of variables are examined and it is deemed appropriate to use first-generation analyzes in the analyzes that do not involve horizontal cross-section dependence. For this purpose, the cointegration relationship between the first-generation cointegration analysis and the Pedroni cointegration analysis is examined. As a result, long-term cointegration relationship was found between variables. Besides panel DOLS estimator was used to estimate cointegration coefficients and it was determined that research and development and innovation investments have a positive effect on financial development. Finally, Dumitrescu and Hurlin (2012) examined the relationship between panel causality analysis and variables and found only one-way causality from AR & GE investments to financial development