Mutual Influence of Innovation and Human Capital on Regional Growth in Neighboring Countries: The Case of Russia and Kazakhstan

The aim is to assess the impact on regional growth of spending on R&D, technological innovation, healthcare, education, and socioeconomic conditions, their spillovers between the country regions, and, primarily, from the neighboring country regions. In existing studies, the authors examined other regions’ impact on regional growth. However, this approach does not reveal the effect the neighboring country’s regions had on the regions’ economic growth. Our approach novelty is that we assessed the impact of regional growth factors from the country and the neighboring country separately. The panel data analysis method applied to the endogenous growth model made it possible to assess these effects on regional economic growth and identify regional convergence. Our results are consistent with other studies regarding regional drivers and their spillovers to other regions within each country. Moreover, our results confirmed the technological innovation cost stream hypothesis in the Russian regions from Kazakhstan regions. And they confirmed the hypothesis that R&D costs flow to the Kazakhstan regions from the Russian regions. Thus, the study revealed a synergistic effect from the regional growth in spending on R&D and technological innovation between Russia and Kazakhstan, which is asymmetric. The proposed approach to analyzing interregional mutual influence is also applicable to three or more countries.