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Does R&D expenditure promote economic growth? An empirical analysis on the EU regional level

Lakicevic, Milan LU (2015) EKHM52 20151
Department of Economic History
Abstract
This study examines possible causal relationship between investments in research and development (R&D) and economic growth of the European Union (EU) regions using R&D per capita as a measure of innovation. Given the importance the EU policies have put on innovation in creating better economic outlook, questions whether investments in R&D are growth enhancing and efficient in promoting economic growth arise. The study tries to answer these questions by focusing on 213 NUTS2 regions across the EU over the period 2005 – 2011. An instrumental variable strategy is proposed to establish a causality claim, which is further supported by a robustness checks. The findings suggest that R&D expenditures have positive and significant effect on... (More)
This study examines possible causal relationship between investments in research and development (R&D) and economic growth of the European Union (EU) regions using R&D per capita as a measure of innovation. Given the importance the EU policies have put on innovation in creating better economic outlook, questions whether investments in R&D are growth enhancing and efficient in promoting economic growth arise. The study tries to answer these questions by focusing on 213 NUTS2 regions across the EU over the period 2005 – 2011. An instrumental variable strategy is proposed to establish a causality claim, which is further supported by a robustness checks. The findings suggest that R&D expenditures have positive and significant effect on economic growth but only in the regions of already well developed countries. The main finding of this study is that regions of the countries close to the technology frontier experience R&D induced growth. Unfortunately, this is not evident for the less developed regions. In conclusion, this study believes that R&D investments are a necessary condition for the sustainable economic growth of the EU, though not always a sufficient one. (Less)
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author
Lakicevic, Milan LU
supervisor
organization
course
EKHM52 20151
year
type
H2 - Master's Degree (Two Years)
subject
keywords
the EU, economic growth, innovation, R&D
language
English
id
7854963
date added to LUP
2015-09-08 09:38:31
date last changed
2015-09-08 09:38:31
@misc{7854963,
  abstract     = {This study examines possible causal relationship between investments in research and development (R&D) and economic growth of the European Union (EU) regions using R&D per capita as a measure of innovation. Given the importance the EU policies have put on innovation in creating better economic outlook, questions whether investments in R&D are growth enhancing and efficient in promoting economic growth arise. The study tries to answer these questions by focusing on 213 NUTS2 regions across the EU over the period 2005 – 2011. An instrumental variable strategy is proposed to establish a causality claim, which is further supported by a robustness checks. The findings suggest that R&D expenditures have positive and significant effect on economic growth but only in the regions of already well developed countries. The main finding of this study is that regions of the countries close to the technology frontier experience R&D induced growth. Unfortunately, this is not evident for the less developed regions. In conclusion, this study believes that R&D investments are a necessary condition for the sustainable economic growth of the EU, though not always a sufficient one.},
  author       = {Lakicevic, Milan},
  keyword      = {the EU,economic growth,innovation,R&D},
  language     = {eng},
  note         = {Student Paper},
  title        = {Does R&D expenditure promote economic growth? An empirical analysis on the EU regional level},
  year         = {2015},
}