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

16 Pages Posted: 13 Jan 2008

See all articles by Polona Domadenik

Polona Domadenik

University of Ljubljana - Faculty of Economics

Janez Praanikar

University of Ljubljana - Faculty of Economics

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA; CEPR; IZA; CERGE-EI; University of Ljubljana

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Abstract

The recent initiative of the European Union Lisbon Agenda to increase levels of R&D investment is addressed by studying the determinants of R&D investment in one of the recent EU entrants, Slovenia. Previous empirical literature mainly cross-sectional in nature - has tested the demand-pull hypothesis and found that overall R&D expenses may be driven by output demand. We use a panel of more than 150 of the largest Slovene firms over the period 1996-2000, modeling firms' R&D behavior within an error-correction framework and estimating it in a system GMM specification. While we find that sales have a significant role in inducing R&D expenditures, we also show that the availability of internal funds and wage bargaining represent important factors determining R&D expenses. Moreover, firms owned by insiders (workers and/or managers) and/or firms with dispersed ownership (small shareholders) display higher R&D investments than firms owned by privatization investment funds or by other firms.

Suggested Citation

Domadenik, Polona and Prasnikar, Janez and Svejnar, Jan, How to Increase R&D in Transition Economies? Evidence from Slovenia. Review of Development Economics, Vol. 12, Iss. 1, pp. 193-208, February 2008, Available at SSRN: https://ssrn.com/abstract=1083219 or http://dx.doi.org/10.1111/j.1467-9361.2008.00434.x

Polona Domadenik

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

HOME PAGE: http://www.ef.uni-lj.si/en/lecturers/lecturer.asp?id=236

Janez Prasnikar

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Jan Svejnar

School of International and Public Affairs, Columbia University, NY, USA ( email )

420 West 118th Street
New York, NY 10027
United States

CEPR

London
United Kingdom

IZA

P.O. Box 7240
Bonn, D-53072
Germany

CERGE-EI

P.O. Box 882
7 Politickych veznu
111 21 Prague 1, Prague
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

University of Ljubljana ( email )

Dunajska 104
Ljubljana, 1000
Slovenia

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