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Is R&D always growth-enhancing? Empirical evidence from the EU countries

Andrzej Kacprzyk and Iwona Świeczewska

Applied Economics Letters, 2019, vol. 26, issue 2, 163-167

Abstract: This study provides empirical evidence regarding the effects of R&D on economic growth in a panel of 28 European Union (EU) countries over the period 1997–2014. In particular, we investigate whether the impact of business and government R&D stocks on economic growth depends on the country’s distance to the world technology frontier. The main findings are that in the EU (i) there is positive, statistically significant business R&D stock–economic growth nexus in countries that are relatively close to the frontier and (ii) no statistically significant relationship was found to exist between government R&D stock and economic growth. From the policy perspective, the results suggest that designing proper national policies that allow switching from investment-based to innovation-based strategies at appropriate moments may be far more important than a simple call for increase in R&D expenditures and setting common numerical targets for all EU-member states.

Date: 2019
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Handle: RePEc:taf:apeclt:v:26:y:2019:i:2:p:163-167