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The Impact of Institutional Features on R&D in Business Enterprise Sector and Sustainable Growth

Author

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  • Milutin Ješić

    (Faculty of Economics, University of Belgrade, Serbia)

  • Miomir Jakšić

    (Faculty of Economics, University of Belgrade, Serbia)

Abstract

The main goal of our study is to theoretically and empirically contribute to the analysis of relation between institutional features and R&D in business enterprise sector and consequently on sustainable economic growth. We exploited the available measures of institutional quality from World Government Indicators of World Bank and data on R&D in business enterprise sector. We employed First-Differencing GMM method to estimate the model on the balanced panel data including the following European countries: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia and the Slovak Republic, for the time span of 2007-2017. The institutional features are statistically significant factor of R&D in business enterprise sector. We found that Government effectiveness and Control of corruption in particular are very important in supporting the R&D. These measures of institutional quality are key institutional determinants of R&D in business enterprise sector. R&D in business enterprise sector is one of the crucial parts of the overall R&D, and therefore policymakers have to develop favourable conditions for those activities in private firms. Institutional features should be an important variable in explanation of R&D intensity. The presented analysis empirically contributes to the body of knowledge on determinants of R&D for European countries that have to develop their institutions further in order to grow sustainably. This study is using contemporary methods for testing the underlying problem.

Suggested Citation

  • Milutin Ješić & Miomir Jakšić, 2020. "The Impact of Institutional Features on R&D in Business Enterprise Sector and Sustainable Growth," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(3), pages 61-76.
    • Handle: RePEc:cbk:journl:v:9:y:2020:i:3:p:61-76
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    References listed on IDEAS

    as
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    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    5. Nikola Fabris & Jelena Galić, 2015. "Essay on Saving and Consumption," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 4(3), pages 123-136.
    6. Alam, Ashraful & Uddin, Moshfique & Yazdifar, Hassan, 2019. "Institutional determinants of R&D investment: Evidence from emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 34-44.
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    More about this item

    Keywords

    R&D in business enterprise sector; institutions; sustainable growth; government effectiveness; control of corruption;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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