IMPORTANCE OF R&D EXPENDITURE FOR ECONOMIC GROWTH IN SELECTED CEE COUNTRIES
Research and development (R&D) is of fundamental importance in the creation of knowledge, products and technologies (Solow, 1956; Jones, 1995; Köhler et al., 2012; OECD, 2012; Szarowská, 2016; 2017). Generally, governments have three main instruments for financing R&D (own R&D, direct funding and indirect funding), each of which has advantages and disadvantages from the perspective of economic theory (David et al., 2000). The financial crisis prompted many governments to introduce tough fiscal consolidation measures and to prioritize other issues over R&D. However, Hud and Hussinger (2015) note that to prevent firms from reducing their R&D expenses and to maintain national R&D capacities, policymakers in many countries reacted immediately to the crisis and increased the public R&D budget.
Jméno a příjmení autora:
Research and development, economic growth, public expenditure, Dumitrescu and Hurlin causality, dynamic panel regression
DOI (& full text):
The goal of the article is to quantify the effect of R&D expenditure on economic growth in selected Central and Eastern European countries. From a methodological perspective, the research is based on…více
The goal of the article is to quantify the effect of R&D expenditure on economic growth in selected Central and Eastern European countries. From a methodological perspective, the research is based on Dumitrescu and Hurlin causality and the dynamic panel regression methodology, based on adapted growth model. The empirical evidence is performed on unbalanced annual panel data of eight selected countries (Bulgaria, Czech Republic, Hungary, Latvia, Poland, Romania, Slovak Republic and Slovenia), during the period 1995-2016. The research confirms that there is a trend to combine direct and indirect public funding instruments. Because of limited financial resources, indirect support has become more important in recent years. Cash grants and tax deduction are the tools most often used for support and funding of R&D in the selected CEE countries.
A dynamic panel analysis with fixed effects confirms a positive and statistically significant impact of R&D expenditure on economic growth. Government R&D expenditure is reported to be a key driver for economic performance followed by business R&D expenditure, a higher share of persons with tertiary education and/or employed in science and technology and country openness. On the contrary, investment and higher education R&D expenditure were found to have a positive but statistically insignificant impact. Hence, special care of policymakers should be given to investment mix. It is decisive to direct and support investment to growth-enhancing areas (e.g. infrastructure and communication, R&D, education and health care) and to improve the ratio between current and capital investment. Attention should also focus on higher education R&D support, and future development must be concentrate on its cooperation with business sector especially in the area of applied research. Finally, a crisis is reported to have a negative and statistically significant impact on economic growth.