How to Increase R&D in Transition Economies? Evidence from Slovenia

Polona Domadenik, Janez Prasnikar and Jan Svejnar

Review of Development Economics, 2008, vol. 12, issue 1, 193-208

Abstract: The recent initiative of the European Union Lisbon Agenda to increase levels of R&D investment is addressed by studying the determinants of R&D investment in one of the recent EU entrants, Slovenia. Previous empirical literature—mainly cross‐sectional in nature—has tested the demand–pull hypothesis and found that overall R&D expenses may be driven by output demand. We use a panel of more than 150 of the largest Slovene firms over the period 1996–2000, modeling firms' R&D behavior within an error‐correction framework and estimating it in a system GMM specification. While we find that sales have a significant role in inducing R&D expenditures, we also show that the availability of internal funds and wage bargaining represent important factors determining R&D expenses. Moreover, firms owned by insiders (workers and/or managers) and/or firms with dispersed ownership (small shareholders) display higher R&D investments than firms owned by privatization investment funds or by other firms.

Date: 2008
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https://doi.org/10.1111/j.1467-9361.2008.00434.x

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Working Paper: How to Increase R&D in Transition Economies? Evidence from Slovenia (2007)
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