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Evaluation of Relative R&D-led Growth with Specific Reference to Heterogeneous Time-varying R&D Decision: A Novel Approach

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  • Ömer Tuğsal Doruk

Abstract

The relationship between R&D expenditures and firm growth is examined for a cross-country firm-level dataset for the EU countries in the period from 1989 to 2019. A panel dynamic average treatment effect is estimated using a panel time-varying dynamic difference-in-differences model. The methodology can be counted as novel. The results show a positive and significant relationship between R&D and firm growth within the first five years of R&D investment in the 22 EU countries, over 700 firms and 30 years. The main novelty of the present study comes from examining the time-varying effect of R&D expenditures on firm growth for manufacturing firms in EU countries.

Suggested Citation

  • Ömer Tuğsal Doruk, 2023. "Evaluation of Relative R&D-led Growth with Specific Reference to Heterogeneous Time-varying R&D Decision: A Novel Approach," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(3), pages 273-291.
    • Handle: RePEc:prg:jnlpep:v:2023:y:2023:i:3:id:832:p:273-291
    DOI: 10.18267/j.pep.832
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    1. Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Growth and Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 947-968, November.
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    More about this item

    Keywords

    R& D; firm growth; EU countries; time-varying R& D-led growth; dynamic time-varying difference in differences; JEL Codes: L25; L29; O00;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General

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