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Innovation Versus Income Convergence In Central And Eastern Europe. Is There A Correlation?

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  • Jude Cristina

    ()
    (Universitatea Babes Bolyai, Stiinte Economice si Gestiunea Afacerilor)

  • Pop Silaghi Monica

    ()
    (Universitatea Babes Bolyai, Stiinte Economice si Gestiunea Afacerilor)

Abstract

The heterogeneity of response of the different economies facing the world economic crisis has brought into attention once again the issue of convergence inside the European Union. The high growth rates experienced by CEEC during the last decade created an optimistic view of rapid convergence towards Western Europe. But the crisis showed that the sources of economic growth in the region were not appropriate for a long run growth. Innovation is a key source of competitiveness and a contributor to a sustainable growth path. Even though CEEC lag behind other European countries in terms of R&D investment, a certain progress can be observed. The objective of the present paper is to establish if there is a correlation between the convergence in terms of GDP and the convergence in terms of innovation for the CEEC. Based on yearly Eurostat data for the period 1998-2008, we quantify the progress of each of the 10 CEEC both in closing the income gap and the innovation gap. We then rank the countries according to their speed of convergence and perform a Spearman rank correlation analysis. The results show that, on average, convergence in R&D is not correlated with convergence in GDP. The Czech Republic is the only country with a positive correlation between R&D intensity and GDP growth. Bulgaria, Hungary and Slovakia show a negative relationship between investment in R&D and economic growth. This implies that for most of the countries in Central and Eastern Europe, economic growth during the period 1998-2008 was mostly driven by non-innovation factors.

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Bibliographic Info

Article provided by University of Oradea, Faculty of Economics in its journal The Journal of the Faculty of Economics - Economic.

Volume (Year): 1 (2011)
Issue (Month): 1 (July)
Pages: 72-79

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Handle: RePEc:ora:journl:v:1:y:2011:i:1:p:72-79

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Related research

Keywords: convergence; growth; innovation; R&D;

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References

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  1. Narula, Rajneesh, 2009. "Attracting and embedding R&D by multinational firms: policy recommendations for EU new member states," MERIT Working Papers 033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the two faces of R&D : productivity growth in a panel of OECD industries," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 784, London School of Economics and Political Science, LSE Library.
  3. Bart van Ark & Marcin Piatkowski, 2004. "Productivity, innovation and ICT in Old and New Europe," International Economics and Economic Policy, Springer, Springer, vol. 1(2), pages 215-246, January.
  4. Bruno Pottelsberghe de la Potterie, 2008. "Europe's R&D: Missing the Wrong Targets?," Intereconomics: Review of European Economic Policy, Springer, Springer, vol. 43(4), pages 220-225, July.
  5. Oleh Havrylyshyn, 2001. "Recovery and Growth in Transition: A Decade of Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 4.
  6. Slavo Radosevic, 2004. "A Two-Tier or Multi-Tier Europe? Assessing the Innovation Capacities of Central and East European Countries in the Enlarged EU," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 42(3), pages 641-666, 09.
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Cited by:
  1. Adina Popovici (B─ârbulescu), 2011. "Human Capital and Higher Education in Romania in the Last Years," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, University of Petrosani, Romania, vol. 11(1), pages 207-214.
  2. Popovici (Barbulescu) Adina, 2012. "Considerations Regarding Romanian Higher Education Graduates," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 377-383, July.

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