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The Optimal Rate of R&D Expenditures in GDP – Between Theory and Practice

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  • Steliana SANDU

    (Institute of National Economy, Bucharest)

Abstract

The relation between economic growth, competitiveness, productivity, on one hand, and investment in research and development (R&D), on the other, has been the research subject of numerous scientific studies. The significant contribution of the investment in R&D to productivity growth, competitiveness and economic growth is generally acknowledged. Some authors have attempted to empirically and theoretically estimate the optimal level of R&D investment at the micro and mezo level, following different paths, according to their option for the aggregation level of analysis or to the different indicators selected as most relevant. Yet, the identification of the R&D investment level that maximizes the productivity growth rate at macroeconomic level seems to have been rather marginal to the general research interest. Available scientific papers estimate it by relating the share of R&D spending in GDP to productivity, expressed through the Total Factor Productivity or labour productivity per hour worked. This paper looks into the correlation between the spending for research and development in some EU countries, as a share of GDP, underlining the relative positions to the optimal interval for R&D investment, according to Mario Coccia estimations, and the corresponding rates of labour productivity growth, during the 2000-2009 period. Special attention will be given to Romania’s positioning in European context, in order to identify potential solutions to future improvement.

Suggested Citation

  • Steliana SANDU, 2010. "The Optimal Rate of R&D Expenditures in GDP – Between Theory and Practice," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 28-42, December.
    • Handle: RePEc:cbu:jrnlec:y:2010:v:4.i:p:28-42
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    References listed on IDEAS

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    1. Simone Valente, 2009. "Optimal Policy and Non-Scale Growth with R&D Externalities," CER-ETH Economics working paper series 09/116, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
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