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

Author

Listed:
  • Domadenik, Polona

    (University of Ljubljana)

  • Prašnikar, Janez

    (University of Ljubljana)

  • Svejnar, Jan

    (Columbia University)

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 error-correction model and estimated in system GMM specification.

Suggested Citation

  • Domadenik, Polona & Prašnikar, Janez & Svejnar, Jan, 2007. "How to Increase R&D in Transition Economies? Evidence from Slovenia," IZA Discussion Papers 2801, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2801
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    Cited by:

    1. Álvarez-Ayuso, Inmaculada C. & Kao, Chihwa & Romero-Jordán, Desiderio, 2018. "Long run effect of public grants and tax credits on R&D investment: A non-stationary panel data approach," Economic Modelling, Elsevier, vol. 75(C), pages 93-104.
    2. Ying Hao & Jing Lu, 2018. "The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China," Financial Management, Financial Management Association International, vol. 47(2), pages 383-419, June.
    3. Shouming Chen & Kaidi Xu & Luu Thi Nguyen & Guangsheng Yu, 2018. "TMT’s Attention towards Financial Goals and Innovation Investment: Evidence from China," Sustainability, MDPI, vol. 10(11), pages 1-18, November.
    4. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    5. Álvarez, Inmaculada C. & Kao, Chihwa & Romero-Jordán, Desiderio, 2016. "Long run effect of public grants on the R&D investment: A non-stationary panel data approach," Efficiency Series Papers 2016/04, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    6. Yu, Po-yang & Lai, Ching-chong, 2020. "Optimal Privatization and Economic Growth in a Schumpeterian Economy," Journal of Macroeconomics, Elsevier, vol. 64(C).
    7. Sajid Anwar & Sizhong Sun, 2014. "Entry of foreign firms and the R&D behaviour: a panel data study of domestic and foreign firms in China's manufacturing sector," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(8), pages 739-757, November.
    8. Hashi, Iraj & Stojčić, Nebojša, 2013. "The impact of innovation activities on firm performance using a multi-stage model: Evidence from the Community Innovation Survey 4," Research Policy, Elsevier, vol. 42(2), pages 353-366.
    9. Simona Bovha-Padilla & Joze P. Damijan & Jozef Konings, 2009. "Financial Constraints and the Cyclicality of R&D Investment:Evidence from Slovenia," LICOS Discussion Papers 23909, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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    More about this item

    Keywords

    institutions; openness; R&D investment; firms in transition; transition; employee ownership and control;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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