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Do business and public sector research and development expenditures contribute to economic growth in Central and Eastern European Countries? A dynamic panel estimation

Monica Ioana Pop Silaghi, Diana Alexa, Cristina Jude () and Cristian Litan

Economic Modelling, 2014, vol. 36, issue C, 108-119

Abstract: This paper empirically estimates the role of private and public research and development in explaining growth of Central and Eastern European Countries (CEE) during 1998–2008. We employ a dynamic panel model using the Arellano–Bond's Generalized Methods of Moments (GMM). Our findings suggest that a 1% increase in business R&D intensity boosts economic growth by 0.050 (0.213) % in these countries in the short (long) run. Public R&D is found to be statistically insignificant. When introducing human capital in the regression, the contribution of business R&D to economic growth decreases, although it remains significant. We argue that part of its effect may be accounted for by human capital. While various robustness checks are performed (such as adding different control variables, sub-periods and dummies for the entrance years to the EU), most of the results imply significant business R&D coefficient. Some policy implications are addressed based on our results.

Keywords: Economic growth; Research and development; Human capital; Central and Eastern European Countries; Generalized Methods of Moments estimator (search for similar items in EconPapers)
JEL-codes: O32 O33 O52 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Do business and public sector research and development expenditures contribute to economic growth in central and eastern European countries? A dynamic panel estimation (2012) Downloads
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DOI: 10.1016/j.econmod.2013.08.035

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