The Impact of Institutional Features on R&D in Business Enterprise Sector and Sustainable Growth

• Main Authors: Ješić Milutin, Jakšić Miomir
• Format: Article
• Language: English
• Published: Sciendo 2020-09-01
• Series: Journal of Central Banking Theory and Practice
• Subjects: institutions; sustainable growth; government effectiveness; control of corruption; o31; o38; o43
• Online Access: https://doi.org/10.2478/jcbtp-2020-0036

The main goal of our study is to theoretically and empirically contribute to the analysis of relation between institutional features and R&D in business enterprise sector and consequently on sustainable economic growth. We exploited the available measures of institutional quality from World Government Indicators of World Bank and data on R&D in business enterprise sector. We employed First-Differencing GMM method to estimate the model on the balanced panel data including the following European countries: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia and the Slovak Republic, for the time span of 2007-2017. The institutional features are statistically significant factor of R&D in business enterprise sector. We found that Government effectiveness and Control of corruption in particular are very important in supporting the R&D. These measures of institutional quality are key institutional determinants of R&D in business enterprise sector. R&D in business enterprise sector is one of the crucial parts of the overall R&D, and therefore policymakers have to develop favourable conditions for those activities in private firms. Institutional features should be an important variable in explanation of R&D intensity. The presented analysis empirically contributes to the body of knowledge on determinants of R&D for European countries that have to develop their institutions further in order to grow sustainably. This study is using contemporary methods for testing the underlying problem.