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

23 Pages Posted: 17 May 2007

See all articles by Jan Svejnar

Jan Svejnar

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

Polona Domadenik

University of Ljubljana - Faculty of Economics

Janez Praanikar

University of Ljubljana - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

Paper addresses the recent initiatives of EU Lisbon Agenda to increase level of R&D expenses in EU Member States by studying firm-level panel data in most advanced transition economy, Slovenia. Previous empirical literature - mainly cross-sectional - has tested the demand-pull hypothesis and found in overall that R&D expenses may be driven by output. Using a panel of over 150 Slovene firms over the 1996-2000 period, and checking for fixed effects, time, industrial and size dummies and for the path-dependent nature of R&D, we also find a significant role of sales in inducing R&D expenditures. Besides that data also confirm that internal funds and (un)successful bargaining for higher wages present significant variables for higher R&D expenses. However, at the micro level, the demand-pull, internal funds and bargaining effects play a varying role for the different sub-samples of firms. In particular, exporting firms, those which are liquidity-constrained, those not receiving public subsidies and those not heading a business group, seem to be particularly sensitive in deciding their R&D expenditures. R&D behavior at the firm level is modeled as error-correction model and estimated in system GMM specification.

Keywords: transition, R&D investment, firms in transition, employee ownership and control, institutions, openness

JEL Classification: C33, D01, L2, 031, P2

Suggested Citation

Svejnar, Jan and Domadenik, Polona and Prasnikar, Janez, How to Increase R&D in Transition Economies? Evidence from Slovenia (May 2007). IZA Discussion Paper No. 2801, Ross School of Business Paper No. 1078, Available at SSRN: https://ssrn.com/abstract=987028 or http://dx.doi.org/10.2139/ssrn.987028

Jan Svejnar (Contact Author)

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

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Polona Domadenik

University of Ljubljana - Faculty of Economics ( email )

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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

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