Macroeconomic factors, liquidity issues and research and development investments: empirical evidence from the EU pharmaceutical industry

Mihaela Curea (), Iuliana Ungureanu () and Marilena Mironiuc ()
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Mihaela Curea: Alexandru Ioan Cuza University of Iasi, Romania
Iuliana Ungureanu: Alexandru Ioan Cuza University of Iasi, Romania
Marilena Mironiuc: Alexandru Ioan Cuza University of Iasi, Romania

Eastern Journal of European Studies, 2023, vol. 14(1), 261-283

Abstract: In recent decades, the business landscape is influenced by corruption, a pervasive phenomenon, faced by all countries, irrespective of their stage of development. The pharmaceutical industry is recognized as a fertile ground for corrupt practices. The paper aims to investigate the impact of corruption, economic freedom, and gross domestic product (GDP) growth on research and development (R&D) investment using a dataset of European Union (EU) pharmaceutical companies from 2011 to 2019. It also investigates the moderating effect of liquidity issues on the relationship between corruption and R&D investment. The study employs a quantitative approach using fixed effects models. Results show that corruption has a negative influence on pharmaceutical firms' decision to undertake R&D activities, while economic freedom and GDP growth have a positive and significant impact on R&D investment. The findings are especially important given the deleterious effects of corruption and may be useful for both managers and policy-makers.

Keywords: R&D; corruption; liquidity issues; pharmaceutical industry (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:jes:journl:y:2023:v:14:p:261-283

DOI: 10.47743/ejes-2023-0113

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