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

Author

Listed:
  • 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.

Suggested Citation

  • Jude Cristina & Pop Silaghi Monica, 2011. "Innovation Versus Income Convergence In Central And Eastern Europe. Is There A Correlation?," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 72-79, July.
  • Handle: RePEc:ora:journl:v:1:y:2011:i:1:p:72-79
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    File URL: http://anale.steconomiceuoradea.ro/volume/2011/n1/073.pdf
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    References listed on IDEAS

    as
    1. Bart van Ark & Marcin Piatkowski, 2004. "Productivity, innovation and ICT in Old and New Europe," International Economics and Economic Policy, Springer, vol. 1(2), pages 215-246, January.
    2. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    3. Bruno Pottelsberghe de la Potterie, 2008. "Europe's R&D: Missing the Wrong Targets?," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(4), pages 220-225, July.
    4. repec:dgr:rugggd:200469 is not listed on IDEAS
    5. 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).
    6. Oleh Havrylyshyn, 2001. "Recovery and Growth in Transition: A Decade of Evidence," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-4.
    7. 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, vol. 42(3), pages 641-666, September.
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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, 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, vol. 1(1), pages 377-383, July.

    More about this item

    Keywords

    convergence; growth; innovation; R&D;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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