Abstract:
It is the latest global trend to invest in Research and Development (R&D) activities which
is essential for the development of innovative knowledge, leading to greater productivity
and economic success. Hence R&D spending in terms of GDP has become a major
development indicator and has a significant correlation between economic growth. This
trend leads to have a higher demand for graduates, those who are expertise in doing
research. The modern trend of the world, especially Developing Countries like Republic
of Korea, China, Singapore, India, have gone to invest a vast amount of money on R&D
rather than investing in other investment opportunities [Wickramasinghe, 2005]. But
most of the South Asian countries, including Sri Lanka (except India) are still not
interested in investing in R&D at national level necessity. As per literature, it is the world
trend to grant a higher tax relief to the private sector companies, which take a major role
in economic growth, to encourage its contribution to R&D spending, Sri Lanka is not
exceptional [Inland Revenue business Tax Policy, 2002 and 2004]. In case of applying
for the international patents, foreign companies play the major role, but Sri Lankan
companies lack in this context [Wickramasinghe, 2005]. Official statistics on R&D in Sri
Lanka is not available and this means that Sri Lanka has not so far realized the
importance and has not yet encouraged investing on it. Therefore, this has become one of
the major reasons for graduates’ unemployment in Sri Lanka, so far has not been
discovered.
The objective of this study is to evaluate the nature of R&D expenditure of Public Quoted
Companies in Sri Lanka, which are considered as the engine of the economic growth and
suggest a mechanism to reduce graduates unemployment through improving R&D.
This study based on the cluster sampling method and size of the sample was 30%. Data
analysis revealed that 2% of companies spend on R&D out of 70 Public Quoted
Companies in Sri Lanka. Majority of them belong to the plantation industry category, but
it only includes development cost on re-plantation rather than doing scientific researches.
If Sri Lankan Public Quoted Companies could remarkably improve their R&D spending
more, Sri Lanka will be able to gain sustainable economic growth through graduated
youth with low unemployment.
