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How to Increase R&D in Transition Economies? Evidence from Slovenia

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Author Info
Polona Domadenik () (University of Ljubljana and Institute for South-East Europe (ISEE))
Janez Prasnikar () (University of Ljubljana and Institute for South-East Europe (ISEE))
Jan Svejnar () (University of Michigan, CERGE-EI, CEPR and IZA)
Abstract

Paper addresses the recent initiatives of EU Lisbon Agenda to increase level of R&D expenses in EU Member States by studying firm-level panel data in most advanced transition economy, Slovenia. Previous empirical literature - mainly cross-sectional - has tested the demand-pull hypothesis and found in overall that R&D expenses may be driven by output. Using a panel of over 150 Slovene firms over the 1996-2000 period, and checking for fixed effects, time, industrial and size dummies and for the path-dependent nature of R&D, we also find a significant role of sales in inducing R&D expenditures. Besides that data also confirm that internal funds and (un)successful bargaining for higher wages present significant variables for higher R&D expenses. However, at the micro level, the demand-pull, internal funds and bargaining effects play a varying role for the different sub-samples of firms. In particular, exporting firms, those which are liquidity-constrained, those not receiving public subsidies and those not heading a business group, seem to be particularly sensitive in deciding their R&D expenditures. R&D behavior at the firm level is modeled as errorcorrection model and estimated in system GMM specification.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2801.

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Length: 23 pages
Date of creation: May 2007
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Handle: RePEc:iza:izadps:dp2801

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Related research
Keywords: transition R&D investment firms in transition employee ownership and control institutions openness

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
P2 - Economic Systems - - Socialist Systems and Transition Economies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  2. Polona Domadenik & Janez Prašnikar & Jan Svejnar, 2003. "Defensive and Strategic Restructuring of Firms during the Transition to a Market Economy," William Davidson Institute Working Papers Series 541, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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